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2014 (7) TMI 701 - HC - VAT and Sales TaxPriority of recovery of tax over other dues - Constitutional validity of Notification S.O. No. 95 dated September 1, 2004 - According to the petitioner, if it is to be held that the statutory first charge created by section 29 of the Bihar Finance Act has to prevail, then there would be a direct conflict between the provisions of section 29(4) of the State Financial Corporation Act, which lays down the priority of appropriation and section 29 of the Bihar Finance Act and by virtue of section 46B of the State Financial Corporation Act, the provisions of the State Financial Corporation Act shall prevail - Held that:- The Bihar Reorganisation Act, 2000 provides for the reorganization of the existing State of Jharkhand and the matters connected therewith. The first charge on the property of the dealer or such person for any amount of tax and penalty payable by the dealer or any other person to the State of Jharkhand is not affected by the Bihar Re-organisation Act, 2000 and the State of Jharkhand is entitled to recover its sales tax and penalty since the tax and the penalty shall be the first charge over the property of the dealer and such a person. Only in exercise of its power to recover the tax payable or the penalty, as a first charge on the property of the dealer, the State of Jharkhand issued the impugned notification directing the petitioner Corporation that no industrial unit to be sold without obtaining "no objection certificate" from the Department of Commercial Taxes, Jharkhand, Ranchi. The first charge created in favour of the State in respect of sales tax dues shall have precedence over an existing mortgage in favour of the Bank. The judicial pronouncement settled the law once for all stating that the State has got priority in the matter of recovery of tax, penalty and debts due and the specific statutory charges created under the said Act (notwithstanding the equitable mortgages created by the defaulters in favour of the banks). The impugned Notification S.O. No. 95 dated September 1, 2004 cannot be said to be arbitrary or illegal, and this writ petition is liable to be dismissed - Following decision of State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation [1994 (12) TMI 72 - SUPREME Court] - Central Bank of India v. State of Kerala [2009 (2) TMI 451 - SUPREME COURT OF INDIA] - Decided against the petitioner.
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