CST dues are not secured debt where no statutory first charge exists, restoring the resolution plan process.

Section 9(2) of the Central Sales Tax Act is only a machinery provision for assessment and recovery and does not create a statutory first charge on a corporate debtor's assets. Because no first charge arises under the CST Act, CST dues cannot be treated as secured debt in insolvency proceedings, unlike a situation where a statute such as the Gujarat VAT Act expressly creates a first charge. On that basis, rejection of the resolution plan and declaration of the State Tax Officer as a secured creditor were legally unsustainable. The impugned orders were set aside and the resolution plan approval process was restored before the Adjudicating Authority.

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Issues: Whether dues under the Central Sales Tax Act constitute secured debt so as to justify rejection of the resolution plan and declaration of the State Tax Officer as a secured creditor.

Analysis: The Tribunal applied its earlier decision that Section 9(2) of the Central Sales Tax Act is only a machinery provision for assessment and recovery and does not create a statutory first charge on the assets of the corporate debtor. The existence of a first charge under Section 48 of the Gujarat VAT Act was distinguished, because that provision expressly creates such charge, whereas no corresponding charge can be implied under the Central Sales Tax Act. On that basis, treating CST dues as secured debt was held to be legally unsustainable, and rejection of the resolution plan on that ground could not stand.

Conclusion: Dues under the Central Sales Tax Act are not secured debt, and the orders rejecting the resolution plan and declaring CST dues as secured creditor were unsustainable; the appeals were allowed and the plan approval application was revived.

Final Conclusion: The impugned orders were set aside, and the resolution plan approval process was restored before the Adjudicating Authority for consequential consideration.

Ratio Decidendi: Section 9(2) of the Central Sales Tax Act does not create a statutory first charge on the corporate debtor's assets, and CST dues therefore cannot be treated as secured debt in insolvency proceedings.

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