TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the priority conferred on secured creditors under Section 26-E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 overrides the first charge created in favour of the State under Section 37(1) of the Maharashtra Value Added Tax Act, 2002. (ii) Whether the statutory charge for sales tax dues could be enforced against the auction purchaser in the absence of notice, notwithstanding sale on an as-is-where-is basis.
Issue (i): Whether the priority conferred on secured creditors under Section 26-E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 overrides the first charge created in favour of the State under Section 37(1) of the Maharashtra Value Added Tax Act, 2002.
Analysis: Section 26-E gives secured creditors priority over all other debts and governmental dues after registration of security interest. Section 37(1) of the Maharashtra Value Added Tax Act, 2002 creates a first charge, but expressly yields to any provision creating a first charge in a Central Act. The later central enactment, read with the scheme of priority under secured-debt legislation, prevails over the State charge. The secured creditor's claim therefore ranks ahead of the sales tax dues for the purpose of distribution of sale proceeds.
Conclusion: The priority under Section 26-E prevails over the State's first charge under Section 37(1), and this issue is answered in favour of the petitioner on the question of inter se priority, though not on the ultimate relief.
Issue (ii): Whether the statutory charge for sales tax dues could be enforced against the auction purchaser in the absence of notice, notwithstanding sale on an as-is-where-is basis.
Analysis: A statutory charge created by law runs with the property and binds subsequent transferees. The absence of actual notice does not by itself extinguish such a charge. The sale documents and the auction conditions indicated that the property was sold on an as-is-where-is and whatever-there-is basis, and the purchaser took the property with its burdens as well as its benefits. The secured creditor was nevertheless expected to make reasonable enquiries and disclose known encumbrances, but the purchaser could not avoid liability for a pre-existing statutory charge merely by relying on lack of notice.
Conclusion: The sales tax charge remained enforceable against the auction purchaser, and this issue is decided against the petitioner.
Final Conclusion: The writ petition failed because the auction purchaser could not obtain a clear title free from the statutory sales tax charge without discharging the dues, and the impugned refusal to transfer the property was not interfered with.
Ratio Decidendi: A statutory charge created by a taxing statute continues to attach to the property in the hands of a transferee, and while secured-creditor priority may govern inter se distribution, an auction purchaser takes the property subject to such statutory burden unless the law expressly displaces it.
TaxTMI 
