Statutory tax charge prevails over mortgage and later sale; Section 100 of the Transfer of Property Act gives no protection.

A statutory charge for sales tax dues under the KGST Act prevails over a mortgage created and a later sale in SARFAESI proceedings when the charge or transfer arises during pending proceedings, and Section 26A applies even if assessment is not yet completed and to involuntary transfers. The purchasers' reliance on Section 100 of the Transfer of Property Act also failed because it does not override the statutory tax charge. The properties in the hands of the purchasers remained liable for recovery, and the tax recovery proceedings were sustained.

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Issues: (i) Whether a mortgage created and a subsequent sale of property in SARFAESI proceedings could defeat recovery of sales tax dues by invoking Section 26A of the KGST Act. (ii) Whether the purchasers could resist recovery proceedings by relying on Section 100 of the Transfer of Property Act.

Issue (i): Whether a mortgage created and a subsequent sale of property in SARFAESI proceedings could defeat recovery of sales tax dues by invoking Section 26A of the KGST Act.

Analysis: Section 26A renders a charge created or transfer made by an assessee void as against claims for tax or other sums payable under the Act when such charge or transfer is created during the pendency of proceedings. The tax liabilities related to the years 2003-04 and 2004-05, and the charge over the properties arose while proceedings under the KGST Act were pending. The provision was held applicable even though assessment was not completed, and it also applies to involuntary transfers.

Conclusion: The challenge based on Section 26A failed and recovery against the properties was upheld.

Issue (ii): Whether the purchasers could resist recovery proceedings by relying on Section 100 of the Transfer of Property Act.

Analysis: Section 100 does not displace the statutory charge for tax dues. The earlier view rejecting this plea had already been followed, and the Court declined to accept the argument that the mortgage charge in favour of purchasers prevailed over the later statutory charge. The properties in the hands of the purchasers remained liable to be proceeded against for the tax arrears.

Conclusion: The objection based on Section 100 of the Transfer of Property Act was rejected.

Final Conclusion: The writ petitions were dismissed, and the tax recovery proceedings against the properties were sustained.

Ratio Decidendi: A statutory charge for tax dues created under the KGST Act prevails against private interests in the property, including mortgages and later transfers, and cannot be defeated by invoking Section 100 of the Transfer of Property Act.

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