TaxTMI 
TaxTMI 
2019 (12) TMI 633
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....(West), Mumbai - 400062 ("said property") was mortgaged by respondent Nos. 4 and 5 to secure the dues payable by respondent No.3 to the predecessor in interest of the petitioner who was the assignee of the debt as per Memorandum of Equitable Mortgage created on 11th November 2011. 3. Bank of India; the original Lender initiated proceedings under Recovery of Debt and Bankruptcy Act, 1993 which has been registered as O.A. No. 54/2014. The petitioner has been substituted as the applicant on debt being assigned. 4. The Bank resorted to proceedings under SARFAESI 2002 by issuing a notice under Sub-section (2) of Section 13 thereof on 30th August 2013. Physical possession of the flat was taken over by the petitioner as the assignee of the debt in November 2016. 5. Respondent No.2 initiated recovery proceedings for recovery of tax dues of M/s Noble Enterprises and published an auction notice under the provisions of the Maharashtra Land Revenue Code, 1966, on 30th September 2016 which envisages recovery of tax dues against the Company by attaching the assets of its directors. Needless to record here that respondent Nos. 4 and 5 are claimed to be the directors of Noble Enterprises.....
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....hstanding Section 31B of RDB Act 1993 being in force, for purposes of action under SARFAESI 2002, the charge created by Section 37 of Maharashtra Value Added Tax 2002 shall prevail. 11. In order to appreciate the dispute between the parties, it is essential to note Section 37 MVAT Act, 2002. It reads: "37. Liability under this Act to be the first charge: - Notwithstanding anything contained in any contract to the contrary but subject to any provision regarding creation of first charge in any Central Act for the same time being in force, any amount of tax, penalty, interest, sum forfeited, fine or any other sum, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer or, as the case may be, person. [(2)(2) The first charge as mentioned in subsection (1) shall be deemed to have been created on the expiry of the period specified in subsection (4) of the section 32, for the payment of tax, penalty, interest, sum forfeited, fine or any other amount." 12. A perusal of Section 37 of MVAT Act, 2002 reveals that though it commences with a non-obstante clause, but it recognizes that the same shall be sub....
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....st charge created under a State legislation. The amendment made by Parliament is to give priority to the secured creditors vis a vis State dues without speaking about the first charge" 16. Dealing with a pari materia provision in the Value Added Tax Act in Madhya Pradesh, in Bank of Baroda Case (Supra), the Madhya Pradesh High Court held as under:- "8. In the present case, undisputedly a notice of sale by the respondent/ Commercial Department has been issued on 19.07.2017. The Amendment Act, 2016, which incorporates Section 31B reads as under: - "31B Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. Explanation.- For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bankruptcy....
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....luding the provisions the provisions of MP VAT Act, Central Sales Tax Act, Entry Tax Act and any other Tax Act. Though, an attempt has been made to demonstrate before this Court that the amendment will not dis-entitle to recover the dues by them as the dues are outstanding since 2012, nothing prevented the State Government to recover the dues since 2012 and the State Government woke up from slumber only after the amendment came into force and by virtue of the amendment in the Central Act, this Court is of the considered opinion that by no stretch of imagination, the State Government can be permitted to auction the property in question as Bank of Baroda has priority charge over the said property in light of the amendment which has been quoted above." 17. Considering a pari materia provision in the Value Added Tax Act in the State of Tamil Nadu, in Indian Overseas Bank Case (supra) the Full Bench of the Madras High Court took a similar view. 18. Considering another pari materia provision in the Gujarat Value Added Tax 2003, in Kalupur Commercial Co.operative Bank Ltd. (Supra), a Division Bench of the Gujarat High Court held as under: "35. While it is true that the Bank....