Statutory first charge for sales tax arrears prevails over prior mortgage; section 17-A does not cut down section 16-C.

The Andhra Pradesh General Sales Tax Act, 1957 confers an overriding first charge on the dealer's property for tax, penalty, interest and other sums due, and that charge prevails over a prior mortgage unless the statute clearly provides otherwise. Applying that principle, the Court treated the State's tax-arrears attachment as enforceable against the petitioner bank's earlier security interest. Section 17-A, which voids transfers or charges made to defraud revenue, was held not to dilute or qualify the priority created by section 16-C, because such a reading would undermine the later amendment and make the first-charge provision ineffective. The challenge to the attachment therefore failed.

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Issues: Whether the State's statutory first charge for sales tax arrears under the Andhra Pradesh General Sales Tax Act, 1957 had priority over the petitioner bank's prior mortgage, and whether section 17-A operated as an exception to section 16-C.

Analysis: Section 16-C creates an overriding first charge on the dealer's property for tax, penalty, interest and other sums payable under the Act. The attachment and sale in question were founded on tax arrears, and the statute had been upheld as giving precedence to the State's dues over existing secured debts. The Court applied the settled principle that a statutory first charge operates on the property as a whole and prevails over a prior mortgage unless the legislation itself clearly provides otherwise. Section 17-A, which voids transfers or charges made to defraud revenue, was held not to qualify or dilute the absolute priority created by section 16-C, since such a reading would defeat the object of the later amendment and render the first-charge provision otiose.

Conclusion: The State's charge for tax arrears prevailed over the petitioner bank's mortgage, and section 17-A did not create an exception to section 16-C. The challenge to the attachment failed.

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