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Issues: Whether the secured creditor had priority over the CGST dues in respect of the secured asset and whether the attachment made by the CGST authorities could be displaced in favour of the secured creditor.
Analysis: The secured creditor asserted statutory priority under Section 26E of the SARFAESI Act, 2002. The CGST authorities had attached the secured asset under Section 79(1)(d) of the Central Goods and Services Tax Act, 2017 for recovery of dues. The Court noted that the secured creditor had not taken over possession of the property, but held that the later non obstante priority under Section 26E prevailed over the recovery mechanism of the CGST authorities. The attachment by the CGST authorities was therefore not to stand against the secured creditor's enforcement rights, and possession was directed to be handed over to the secured creditor with an inventory to be prepared in the presence of the borrower or its representatives.
Conclusion: The secured creditor's claim to priority was upheld and the CGST attachment was subordinated to the secured creditor's rights, in favour of the secured creditor.
Final Conclusion: The secured creditor was permitted to proceed against the secured asset under the SARFAESI regime, while the CGST authorities' recovery rights remained subject to that priority.
Ratio Decidendi: Where a secured creditor's rights are protected by Section 26E of the SARFAESI Act, 2002, that statutory priority prevails over competing recovery and attachment claims of tax authorities under later invoked revenue recovery provisions.
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