Secured creditor priority defeats prior sales tax charge over auctioned property; mutation entry deleted

Where property is sold by a secured creditor under the recovery framework and title passes to the auction purchaser through a sale certificate and sale deed, a prior sales tax charge cannot continue against that property because sales tax dues do not take precedence over the secured creditor's statutory priority. The corresponding revenue or mutation entry based on that charge could not survive against the purchaser and was deleted. The State was left free to pursue its claim against the sale consideration in accordance with law.

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Issues: Whether the sales tax department could continue its charge over property sold in auction by the secured creditor and whether such charge and the corresponding revenue entry were liable to be removed.

Analysis: The property had been sold by the secured creditor under the recovery framework, and the petitioner became the successful auction purchaser on execution of the sale certificate and sale deed. The legal position applied is that dues of the sales tax department do not have precedence over the claims of a secured creditor in respect of such sold property. The continuing charge created for sales tax dues therefore could not survive against the auction purchaser, though the State was left free to pursue its claim against the sale consideration in accordance with law.

Conclusion: The charge over the property and the related mutation entry were quashed and deleted, and the relief was granted in favour of the petitioner.

Ratio Decidendi: Where property is sold by a secured creditor under the recovery law and the purchaser obtains title through a sale certificate and sale deed, a prior sales tax charge cannot override the secured creditor's statutory priority against the property itself.

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