AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 809
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....ugned order dated 18th March 2020 in respect of the secured asset and for setting aside the charge, if any, of the Respondent No. 1-Assistant Commissioner of Sales Tax ("department", for short) over the said secured assets. 2. By the impugned order dated 18th March 2020, the department ordered Mr./Mrs. Haresh Dharmani, Proprietor of M/s. Gajanan India Chemco ("borrower", for short), prohibiting and restraining them from transferring or charging the property as specified in the Schedule, by sale, gift or otherwise. Clause 7 of the said notice dated 18th March 2020 stipulates that the copy is marked to the Manager of the Bank for information. 3. The facts of the present case in brief are as under:- The Bank is a secured credito....
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....estigation-A Branch, Mumbai has been filed on behalf of the department. A stand is taken in the affidavit that an investigation visit was conducted by the department from 23rd September 2013 to 1st October 2013 in the case of Gajanan India Chemco (unregistered dealer - URD) owned by the borrower. It was noticed during investigation that the dealer was not registered under the Maharashtra Value Added Tax Act, 2002 ("MVAT Act", for short) and Mr. Haresh Dharmani operates bank account of the company wherein huge deposits and withdrawals were noticed. Mr. Haresh Dharmani in his statement has accepted that these are financial transactions and are operated by him. 8. By orders dated 31st March 2015 and 18th November 2019, the dealer was ass....
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....er of Sales Tax Nodal 9, Mumbai & Anr. (Writ Petition No. 2935 of 2018, judgment dated 30th August 2022). It is submitted that the Full Bench of this Court has conclusively settled the legal position regarding priority of claims between secured creditors and State revenue authorities. It is submitted that the Bank has registered its security interest with CERSAI on 30th June 2012, which is very much prior to the attachment order dated 18th March 2020 of the department. It is submitted that where a secured creditor has registered its security interest under the SARFAESI Act, the claim of such secured creditor must prevail over tax or revenue dues of the State, even if such dues are declared as first charge under State laws. It is therefore s....
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....ction 37 of the MVAT Act for convenience. Section 37 reads thus:- "37. Liability under this Act to be the first charge- (1) Notwithstanding anything contained in any law for the time being in force, or any contract to the contrary, 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 first charge on the property of the dealer or, as the case may be, person. (2) The first charge as mentioned in sub-section (1) shall be deemed to have been created on the expiry of the period specified in sub-section (4) of section 32 for the payment of tax, penalty, interest, sum forfeited, fine or any other amount. 14. In our opinion, the iss....
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....nch, the Bank has priority to realize its dues. 17. The unamended Section 37 of the MVAT Act made the MVAT Act expressly subordinate or subservient to any central legislation creating first charge and by way of amendment, the State of Maharashtra has in essence only removed such subordination or subservience to the central legislation. The Full Bench discussed and dealt with similar provisions and scenario at length in paragraphs 81 to 92. The Full Bench in paragraph 82 and 83 observed thus:- "82. Each of the aforesaid several legislations operate in their particular field. Pertinently, wherever the legislature of the State intended the particular provision to be the dominant legislation or subordinate or subservient to any othe....
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.... turns on it. The express language of section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable, is sufficient to off-set the 'paramount charge' created by sub-section (1) of section 169. Similarly, even if there were no express intendment in the relevant provisions of the BST Act (section 38C) and the MVAT Act (section 37) to the effect that such provisions would be subordinate to any Central Act creating 'first charge', the same would obviously have to be read, invoked and exercised subject to section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable." 18. We are therefore in agreement with the contention of learned counsel for the Petitioner that where a secured creditor has regist....