Court rules in favor of Sales Tax Department over RIICO regarding property charge dispute.

The court held that Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) does not have a first charge on the borrower's property, as alleged by the petitioner. Section 11AAAA of the Rajasthan Sales Tax Act establishes that tax dues are the first charge on a dealer's property, prioritizing debts due to the Sales Tax Department. The court emphasized that statutory provisions, such as Section 11AAAA, take precedence over agreements between parties. The petition seeking reliefs against the respondents was dismissed as lacking merit, with the court supporting the Sales Tax Department's actions in accordance with the law.

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Issues:
1. Priority of charges between Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) and Sales Tax Department.
2. Interpretation of Section 11AAAA of the Rajasthan Sales Tax Act, 1954.
3. Effect of Section 46(B) of the State Financial Corporations Act, 1951.
4. Validity of the petition seeking reliefs against the respondents.

Analysis:
1. The petitioner argued that the loan agreement between RIICO and the respondent-Company gives RIICO a first charge on the assets, overriding any claim by the Sales Tax Department. However, the court clarified that Section 29(4) of the Act of 1951 does not create a first charge but provides a procedure for recovering costs and expenses from the sale of mortgaged property. The court held that RIICO does not have a first charge on the borrower's property as alleged by the petitioner.

2. Section 11AAAA of the Rajasthan Sales Tax Act establishes that tax dues are the first charge on a dealer's property. The court noted that this provision, starting with a non obstante clause, prioritizes debts due to the Sales Tax Department over other dues. The court emphasized that the agreement between RIICO and the borrower, though statutory, cannot override Section 11AAAA, as it is not a statutory provision of law. Therefore, the Sales Tax Department has the authority to attach and auction the property for debt recovery.

3. Section 46(B) of the Act of 1951 states that its provisions will have effect despite any inconsistency with other laws. The court clarified that since Section 29(4) does not create a first charge on assets, Section 46(B) does not override Section 11AAAA of the Rajasthan Sales Tax Act. The court emphasized that the agreement between RIICO and the borrower does not have the same legal standing as statutory provisions.

4. The court dismissed the petition seeking various reliefs against the respondents, stating that the Sales Tax Department's actions were in accordance with the law. The court highlighted a Supreme Court decision supporting the precedence of the statutory charge created by Section 11AAAA over other charges on the property. The court concluded that the petition lacked merit and dismissed it at the admission stage.

Overall, the judgment clarified the priority of charges, upheld the validity of Section 11AAAA, and emphasized that statutory provisions take precedence over agreements between parties.

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