Statutory first charge under sales tax law prevails over secured debt despite competing non obstante provisions.

A statutory first charge under the sales tax law prevails over prior secured interests and the appropriation claim of a financial corporation. The State Financial Corporations Act, including its non obstante clause and scheme for sale proceeds, did not displace the tax statute's overriding charge. Applying the principle on competing non obstante clauses and statutory charges, the notification requiring a no objection certificate before sale of industrial units and deduction of sales tax from sale proceeds was treated as a valid recovery mechanism rather than an arbitrary exercise of power. The challenge to the notification failed and the writ petition was dismissed.

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Issues: Whether the impugned notification requiring no objection certificate before sale of industrial units and directing deduction and payment of sales tax from sale proceeds was ultra vires in view of the priority scheme under the State Financial Corporations Act, and whether the State's statutory first charge under the Bihar Finance Act prevailed.

Analysis: The State Finance Act created a statutory first charge on the dealer's property for tax and penalty dues. The State Financial Corporations Act, though containing a non obstante clause and regulating appropriation of sale proceeds, did not override a valid first charge created by the State tax law. Applying the settled principle on competing non obstante clauses and statutory charges, the Court held that a charge created by operation of law in favour of the State has precedence over an existing mortgage or secured debt. The notification was only an enforcement measure to secure recovery of the State's dues and was not arbitrary or without jurisdiction.

Conclusion: The notification was upheld and the challenge to it failed.

Final Conclusion: The State's statutory first charge for sales tax and penalty dues prevailed over the Corporation's appropriation claim, and the writ petition was dismissed.

Ratio Decidendi: A statutory first charge created by a sales tax law prevails over prior secured interests, and a non obstante clause in the State Financial Corporations Act does not displace that priority where the tax statute itself gives overriding effect to the State's charge.

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