Statutory charge over property gives sales tax dues priority over secured creditor claims and auction purchasers.

Sales tax dues were treated as having priority over a secured creditor's claim because the Tamil Nadu General Sales Tax Act, 1959 creates a statutory charge under Section 24 over the defaulter's property. The Court applied the settled rule that priority between government dues and secured interests depends on whether the taxing statute itself creates such a charge, and held that a statutory charge prevails over mortgage rights. It further noted that the non obstante provisions of the Tamil Nadu General Sales Tax Act and the SARFAESI Act could be harmoniously applied, so there was no conflict displacing the statutory charge. Recovery against the auction purchasers was therefore upheld.

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Issues: Whether the sales tax dues of the defaulter had priority over the claim of the secured creditor and could be enforced against the auction purchasers.

Analysis: The Court relied on the settled principle that the priority between government dues and secured creditor claims depends on whether the statute creating the dues also creates a charge over the property. It noted that the Tamil Nadu General Sales Tax Act, 1959 creates a statutory charge under Section 24, and that such charge prevails over mortgage rights. The Court further held that the non obstante provisions of the Tamil Nadu General Sales Tax Act, 1959 and the SARFAESI Act are not in conflict and can be harmoniously applied, with statutory charges having precedence over secured interests.

Conclusion: The sales tax dues had priority over the secured creditor's claim, and the writ petitions challenging recovery from the auction purchasers were liable to be dismissed.

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