State notification upheld over sales tax dues, Bihar Corporation claim dismissed.

The court held that the impugned notification issued by the State of Jharkhand was deemed valid and not arbitrary or illegal. It was established that the statutory first charge in favor of the State for sales tax dues took precedence over the claims of the Bihar State Financial Corporation. Consequently, the writ petition was dismissed, and the interlocutory applications were closed.

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Issues Involved:
1. Validity of the impugned notification issued by the State of Jharkhand.
2. Conflict between the State Financial Corporation Act and the Bihar Finance Act.
3. Priority of appropriation of sale proceeds under section 29(4) of the State Financial Corporation Act.
4. Non obstante clauses in section 46B of the State Financial Corporation Act and section 29 of the Bihar Finance Act.
5. Authority of the State Government to issue the impugned notification under section 29 of the Bihar Finance Act.
6. Impact of the Bihar Reorganization Act on the functioning of the Bihar State Financial Corporation.

Detailed Analysis:

1. Validity of the Impugned Notification:
The Bihar State Financial Corporation challenged the notification S.O. No. 95 dated September 1, 2004, issued by the State of Jharkhand, which mandated obtaining a "no objection certificate" from the Department of Commercial Taxes before the sale of any industrial unit. The petitioner argued that this notification was void and illegal as it altered the priority of appropriation of sale proceeds under section 29(4) of the State Financial Corporation Act.

2. Conflict Between Acts:
The petitioner contended that if the statutory first charge under section 29 of the Bihar Finance Act prevailed, it would conflict with section 29(4) of the State Financial Corporation Act, which prioritizes the Corporation's dues. They argued that section 46B of the State Financial Corporation Act, with its non obstante clause, should prevail over any conflicting provisions in other laws.

3. Priority of Appropriation of Sale Proceeds:
The petitioner emphasized that section 29(4) of the State Financial Corporation Act specifies the order of appropriation of sale proceeds, giving the Corporation priority over other claims. They argued that the impugned notification deprived the Corporation of its legitimate dues and was arbitrary and discriminatory.

4. Non Obstante Clauses:
The court examined the non obstante clauses in section 46B of the State Financial Corporation Act and section 29 of the Bihar Finance Act. The non obstante clause in section 29 of the Bihar Finance Act stipulates that sales tax payable shall be the first charge on the property of the dealer, giving it statutory recognition over other debts.

5. Authority of the State Government:
The respondent argued that under section 29 of the Bihar Finance Act, the State Government had the authority to issue the notification, and section 46B of the State Financial Corporation Act did not restrict this power. The court referred to several Supreme Court judgments, including Central Bank of India v. State of Kerala, which upheld the State's first charge over other debts.

6. Impact of the Bihar Reorganization Act:
The petitioner argued that section 64 of the Bihar Reorganization Act indicated that the Bihar State Financial Corporation should continue to function over the entire area of the erstwhile State of Bihar, and only the Central Government could issue instructions regarding its functioning. However, the court found that the Bihar Reorganization Act did not affect the State's right to recover sales tax and penalty as a first charge on the property of the dealer.

Conclusion:
The court held that the impugned notification issued by the State of Jharkhand was not arbitrary or illegal. The statutory first charge in favor of the State for sales tax dues had precedence over the claims of the Bihar State Financial Corporation. The writ petition was dismissed, and the interlocutory applications were closed.

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