Statutory charge under State VAT law yielded to insolvency waterfall, leaving resolution plan allocation undisturbed.

The statutory charge under the Maharashtra Value Added Tax Act was held to yield to the insolvency distribution framework because Section 37 makes that charge subject to any Central Act creating a first charge. On that basis, the Insolvency and Bankruptcy Code waterfall under Section 53 governed distribution in the resolution process, and the Department of State Tax could not claim secured creditor status in the manner asserted. The prior decision relied on by the Department was treated as distinguishable due to different statutory wording. The resolution plan allocation was therefore left undisturbed and no ground was found to interfere.

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Issues: Whether the Department of State Tax could claim treatment as a secured creditor so as to challenge the resolution plan allocation, and whether the appeal raised any ground warranting interference with approval of the plan.

Analysis: The dispute turned on the effect of Section 37 of the Maharashtra Value Added Tax Act, 2002, which makes the statutory charge subject to any provision regarding creation of first charge in a Central Act. The insolvency framework under Section 53 of the Insolvency and Bankruptcy Code, 2016 was treated as the governing waterfall mechanism. The earlier decision relied upon by the appellant was held to be distinguishable on account of the different statutory wording.

Conclusion: The Department of State Tax was not entitled to be treated as a secured creditor in the manner claimed, and no ground was made out to interfere with approval of the resolution plan. The appeal was dismissed.

Final Conclusion: The statutory charge under the State VAT law yielded to the insolvency distribution mechanism, leaving the resolution plan allocation undisturbed.

Ratio Decidendi: Where the State VAT provision itself makes the charge subject to creation of first charge under a Central Act, the Insolvency and Bankruptcy Code's distribution framework prevails and the tax department cannot claim secured creditor status contrary to that mechanism.

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