Secured creditor priority over State tax dues supports sale certificate registration free from later attachment and revenue encumbrance.

Priority of a duly registered secured creditor under the SARFAESI framework is described as prevailing over State tax claims where the security interest was registered with CERSAI before the State attachment. The note states that an attachment order and revenue entry for sales tax dues do not override that prior secured interest when the State charge is not shown to be registered and procedural requirements for attachment and proclamation are not established. It further states that amended Section 37 of the Maharashtra Value Added Tax Act does not displace that priority, and the sale certificate may be registered without requiring the State's no-objection.

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Issues: Whether the auction purchaser was entitled to registration of the sale certificate free from the State tax encumbrance, and whether the attachment order and revenue entry created for sales tax dues could override the secured creditor's prior claim.

Analysis: The security interest of the secured creditor had been registered with CERSAI long before the State attachment, while the State charge was neither shown to be registered nor supported by compliance with the procedural requirements governing attachment and proclamation under the revenue recovery framework. The amended Section 37 of the Maharashtra Value Added Tax Act, 2002 did not assist the State, as an identical contention had already been rejected, and the law remained that a duly registered secured creditor's statutory priority under the SARFAESI regime prevails over State revenue claims, including tax dues.

Conclusion: The auction purchaser's claim was upheld. The attachment order and encumbrance were liable to be quashed, and registration of the sale certificate was directed without insisting on the State's no-objection.

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