Security interest priority under SARFAESI prevails over sales tax dues when CERSAI registration is earlier.

Where a secured creditor had registered its security interest in CERSAI before the Sales Tax Department asserted its claim, Section 26E of the SARFAESI Act gave the secured creditor priority in payment over other debts, including taxes and revenues. Applying the Full Bench principle that a duly registered security interest prevails over governmental dues, the Court treated the earlier CERSAI registration as decisive for inter se priority. Attachment orders issued by the revenue authority could not override that priority, and the secured creditor's rights over the sold assets prevailed.

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Issues: Whether the Sales Tax Department could claim priority charge over the secured assets sold by the secured creditor under the SARFAESI Act, and whether the attachment orders issued against those assets could stand despite the Bank's prior CERSAI registration.

Analysis: The secured creditor had registered its security interest in CERSAI before the Sales Tax Department registered its claim. Section 26E of the SARFAESI Act confers priority on a secured creditor in payment over all other debts, revenues, taxes, cesses and rates, and operates notwithstanding anything contained in any other law. The Full Bench ruling applied by the Court held that where the security interest is duly registered, the secured creditor gets precedence over governmental dues, including sales tax dues, and attachment orders issued by the revenue authority cannot defeat that priority. The Court therefore treated the earlier CERSAI registration as ative of inter se priority.

Conclusion: The Sales Tax Department had no priority charge over the secured assets, and the attachment orders could not prevail against the secured creditor's rights.

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