Statutory first charge for sales tax prevails over secured creditor claim and validates departmental attachment and auction.

A statutory first charge created by Section 11AAAA of the Rajasthan Sales Tax Act, 1954 for tax, penalty and interest prevails over a State Financial Corporation's claim over a dealer's property. Section 29(4) of the State Financial Corporations Act, 1951 governs only the appropriation of sale proceeds after the Corporation takes over and sells secured assets; it does not create a competing first charge. Section 46B gives overriding effect only where there is real inconsistency, which was not found here. The Court therefore upheld the Sales Tax Department's priority, rejected the constitutional challenge, and treated the departmental attachment and auction as lawful.

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Issues: Whether the dues of the Sales Tax Department under Section 11AAAA of the Rajasthan Sales Tax Act, 1954 constituted a first charge on the dealer's property, overriding the Financial Corporation's claim under Sections 29(1), 29(4) and 46B of the State Financial Corporations Act, 1951, and whether the departmental attachment and auction could be quashed.

Analysis: Section 29(4) of the State Financial Corporations Act, 1951 only regulates the application of sale proceeds after the Corporation takes over and sells the secured assets. It does not create a first charge in favour of the Corporation. Section 46B gives overriding effect to the Act of 1951 only where there is inconsistency, but no such inconsistency exists because Section 29(4) does not create a charge competing with the statutory first charge created by Section 11AAAA. That provision expressly declares that tax, penalty, interest and other sums payable under the Rajasthan Sales Tax Act, 1954 shall be the first charge on the property of the dealer or other person. The statutory first charge therefore prevails over the Corporation's claim and also overrides any contrary contractual term in the loan agreement. In the absence of a real constitutional or statutory conflict, Article 254 of the Constitution of India was not attracted.

Conclusion: The Sales Tax Department's first charge was upheld, the challenge to Section 11AAAA failed, and the departmental attachment and auction were held to be lawful.

Ratio Decidendi: Where a sales tax statute creates an express first charge by a non obstante clause, that statutory charge prevails over the secured creditor's claim unless the competing statute itself creates a conflicting first charge or other express inconsistency.

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