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2009 (6) TMI 931 - HC - VAT and Sales TaxAuction notice challenged - Whether the respondents having first charge over the property, have the right to sell the property? Held that:- In the present case, it will be evident that the assessee (dealer—M/s. Jay Flash Ceramics Ltd.) mortgaged the land in question in favour of Indian Bank on August 1, 1990. After promulgation of NPA Act, the bank being the secured creditor and mortgaged property being a secured debt, the bank had right to auction sell the property. The assessee (dealer—M/s. Jay Flash Ceramics) becomes eligible for interest-free sales tax on July 5, 1993, i.e., much after the property was mortgaged. Sales tax deferment agreement was reached on September 1, 1993 and April 22, 1996, i.e., much after the properties in question were mortgaged in favour of the bank. In that view of the matter also, the State cannot claim first charge over the property in question nor can it claim any priority over the debts due to the bank. Thus the respondents had no jurisdiction to auction sell the property in question and the impugned auction notice dated February 5, 2007 issued for auction sale of the property, which was mortgaged with the Bank and which has already been auction sold in favour of one K.O.P. Enterprises and subsequently purchased by the petitioner, is fit to be set aside. W.P. allowed.
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