Secured creditor priority over State tax dues under SARFAESI prevailed, defeating tax attachment and revenue entry.

A secured creditor's prior mortgage and enforcement under the SARFAESI Act prevailed over the State's VAT claim. The Court applied the settled principle that State tax dues do not override a secured creditor unless the taxing statute expressly creates a first charge. Section 48 of the Gujarat Value Added Tax Act, 2003 was held insufficient to displace the bank's priority, and SARFAESI's overriding framework controlled the secured asset. The tax attachment and the consequential revenue entry were therefore inconsistent with the bank's security interest and liable to be quashed, with release of the conveyance deed and mutation in favour of the purchaser.

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Issues: Whether the State could claim first charge over the secured asset sold by the bank under the SARFAESI Act for recovery of VAT dues, and whether the attachment and consequential revenue entry could stand.

Analysis: The land had been mortgaged in favour of the bank and proceeded against as a secured asset under the SARFAESI Act. The Court applied the settled rule that, unless the taxing statute creates a specific first charge, State dues do not prevail over the rights of a secured creditor. Section 48 of the Gujarat Value Added Tax Act, 2003 was held not to displace the bank's priority, and the SARFAESI framework, including its overriding effect, governed the secured asset. The attachment by the Sales Tax authority and the mutation based on that claim were therefore inconsistent with the bank's prior security interest.

Conclusion: The State could not assert first charge over the subject land. The attachment order and the revenue entry were liable to be quashed, and the writ applicant was entitled to release of the conveyance deed and mutation in its favour.

Final Conclusion: The secured creditor's rights prevailed over the State's tax claim, and the impugned tax attachment and consequential revenue restrictions were set aside.

Ratio Decidendi: A secured creditor's claim over mortgaged property prevails over State tax dues unless the taxing statute expressly creates a first charge, and the SARFAESI Act operates with overriding effect where applicable.

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