First-charge tax claims yield to the insolvency waterfall where the State statute is expressly subject to Central law.

A State tax claim under the Maharashtra VAT Act did not override the insolvency waterfall under Section 53 of the Insolvency and Bankruptcy Code because Section 37 makes the first charge expressly subject to any Central Act. The approved resolution plan therefore remained effective, and the admitted tax claim could not defeat the distribution scheme in insolvency. The text distinguishes the Gujarat VAT precedent on the basis that its charging provision used materially different language and lacked the same express subordination to Central law.

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Issues: Whether the State tax authority's claim under the Maharashtra Value Added Tax Act, 2002 created a first charge overriding the waterfall mechanism under the Insolvency and Bankruptcy Code, 2016, so as to invalidate the resolution plan's treatment of the admitted tax claim.

Analysis: Section 37 of the Maharashtra Value Added Tax Act, 2002 expressly makes the first charge on the dealer's property subject to any provision regarding creation of first charge in any Central Act. The waterfall distribution under Section 53 of the Insolvency and Bankruptcy Code, 2016 was treated as the governing central law in the insolvency process. The Court distinguished the earlier ruling based on Section 48 of the Gujarat Value Added Tax Act, 2002, which had materially different language and did not contain the same express subordination to a Central Act. On that basis, the claim could not displace the approved resolution plan, and the allocation made to the appellant did not violate the insolvency framework.

Conclusion: The tax authority's reliance on the first-charge doctrine failed, and the challenge to the approved resolution plan was rejected.

Final Conclusion: The appeal was dismissed because the Maharashtra VAT charging provision was subordinate to the central insolvency distribution scheme and the Supreme Court precedent relied upon was held to be distinguishable.

Ratio Decidendi: Where a State tax statute itself makes the first charge subject to any Central Act, the insolvency waterfall under the Insolvency and Bankruptcy Code prevails and the State tax claim cannot defeat an approved resolution plan.

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