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Issues: Whether a secured creditor who had registered its security interest with CERSAI prior to the State tax authorities' attachment could claim priority over sales tax and GST dues, and whether Section 26E of the SARFAESI Act, 2002 overrides the State enactment creating a first charge in favour of tax dues.
Analysis: The security interest stood registered with CERSAI on 17 March 2017, while the State tax authorities had not registered any competing security interest. Section 26E of the SARFAESI Act, 2002 gives priority to a registered secured creditor over all other debts, including revenues, taxes, cesses and other rates payable to the State Government or local authority. The non obstante clause in Section 26E, read with the scheme of Sections 26B and 26D, confers precedence on the secured creditor upon registration. The State's reliance on the Maharashtra Value Added Tax Act, 2002 could not prevail in view of the later central legislation and the binding Full Bench interpretation that attachment orders issued by the State after the secured creditor's CERSAI registration do not displace the secured creditor's priority.
Conclusion: The secured creditor's claim had priority over the State tax dues, and the impugned recovery actions and charge entries could not defeat that priority.
Ratio Decidendi: A secured creditor who has duly registered its security interest with CERSAI acquires statutory priority under Section 26E of the SARFAESI Act, 2002 over competing State tax claims, and such priority prevails notwithstanding any State law creating a first charge.
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