Statutory tax charge prevails over an uncreated private charge when default triggers recovery under sales tax law.

A compromise decree and earlier arbitration order did not create a legally effective charge on the borrower's properties before tax recovery steps were taken, as they only restrained alienation and did not amount to a charge in property law. By contrast, the statutory charge under section 23(1) of the Kerala General Sales Tax Act arose on default after service of demand notice and operated by force of law. That statutory charge prevailed over the appellant's asserted private claim, so the State's tax recovery rights took priority.

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Issues: (i) Whether the order passed in arbitration proceedings and the later decree could be treated as creating a charge on the properties of the borrower before the tax attachment. (ii) Whether the statutory charge arising on default under section 23(1) of the Kerala General Sales Tax Act had priority over the appellant's claim.

Issue (i): Whether the order passed in arbitration proceedings and the later decree could be treated as creating a charge on the properties of the borrower before the tax attachment.

Analysis: The earlier order and the compromise decree did not create a charge in the sense understood under property law. The decree merely continued an injunction restraining alienation and did not amount to creation of a legally effective charge before the tax recovery steps were taken.

Conclusion: The alleged private charge was not effective in law before the tax attachment and did not prevail over it.

Issue (ii): Whether the statutory charge arising on default under section 23(1) of the Kerala General Sales Tax Act had priority over the appellant's claim.

Analysis: Under section 23(1), if tax demanded under the Act is not paid within the prescribed time, the outstanding amount becomes immediately due and operates as a charge on the defaulter's properties. On the facts, the demand notice was served, default continued, and the statutory charge came into existence after the appellant's alleged protection but independently and by force of the statute.

Conclusion: The statutory charge under section 23(1) had priority, and the appellant had no superior claim over the State's tax dues.

Final Conclusion: The appeals failed because the appellant's asserted charge was not legally effective against the prior tax recovery attachment, and the State's statutory charge for sales tax dues prevailed.

Ratio Decidendi: A charge arising under a taxing statute on default operates by force of law and prevails according to its statutory effect, while an injunction or compromise order that does not create a legally effective charge cannot defeat the State's recovery rights.

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