Bombay HC Rules Secured Creditors' Claims Prevail Over State Sales Tax Dues; Quashes Lien Assertion.

In a decision by the Bombay HC, the petitioner, a secured creditor, contested a letter from the Deputy Commissioner of Sales Tax asserting a lien on a property for sales tax dues. The court, citing its earlier ruling in Writ Petition 1039 of 2017, upheld that the claims of a secured creditor take precedence over state tax dues under Maharashtra Sales Tax or VAT laws. The court quashed the lien assertion and clarified that any surplus from the sale of the secured asset should be allocated to the Sales Tax Department, State of Maharashtra, if available.

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In the judgment from the Bombay High Court, the petitioner, a secured creditor, challenged a letter from the Deputy Commissioner of Sales Tax dated March 14, 2018, which claimed a lien on a property due to sales tax dues owed to the State Government. The court referenced its prior decision in Writ Petition 1039 of 2017, stating that "the dues of a secured debtor rank above the dues of the State Government under the Maharashtra Sales Tax or a Value Added Tax." Consequently, the court quashed the letter asserting the lien. The judgment further clarified that any surplus from the sale of the secured asset should be transmitted to the Sales Tax Department, State of Maharashtra, if available.

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