Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2021 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 1026 - HC - VAT and Sales TaxRecovery of dues - priority of charges - attachment of property in question which already stands mortgaged with petitioners by respondent No. 4, by creating and claiming their first charge upon the same - Body Corporates constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or not - first charge upon the property of the dealer in terms of the provisions of the RDB Act and the SARFAESI Act, as amended from time to time or not - whether the first charge shall be that of respondents No. 1 to 3 in terms of the provisions of Section 26 of the Himachal Pradesh Value Added Tax Act, 2005? HELD THAT:- By virtue of the amendments incorporated in the Central Statutes, the Financial Institutions now have priority over the rights claimed by the Revenue. Section 26E of the SARFAESI Act 2002 and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 create “First Charge” by way of priority in favour of the Banks and Financial Institutions de hors any non obstante Clause contained in any Local Statute. The Legislators were aware of the lacunae which were existing in the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, on account of which, the Banks/Financial Institutions were not having first charge by way of priority to recover and satisfy their debts visavis the Revenue in lieu of the statutory provisions contained in the Local Acts. It was to over ride this difficulty that the amendments were incorporated. A perusal of the provisions of Section 38 of the KVAT Act and Section 26 of the HP VAT Act demonstrates that these provisions are almost pari materia. This Court concurs with the reasoning of the Hon’ble High Court of Kerala that after coming into force of Section 31B of the RDB Act read with Section 26E of the SARFAESI Act, the first charge is created by way of priority in favour of the Banks/Financial Institutions to recover and satisfy their debts, notwithstanding any local statutory “first charge” in favour of the Revenue - It is also necessary to take note of one fact that though Section 26E of the SARFAESI Act has come into force from 24.01.2020, yet the same will not have any effect on the issue of the Banks/Financial Institutions having first charge on the property of the dealer, as the provisions of Section 31B of the RDB Act shall over ride the provisions of Section 26 of the HP VAT Act, 2005. The provision of Section 48 of the Gujarat Value Added Tax Act,2003, is also pari materia to the provisions of Section 26 of the Himachal Pradesh Value Added Tax Act, 2005. The Hon’ble High Court of Gujarat in BANK OF BARODA THROUGH ITS ASSISTANT GENERAL MANAGER PREM NARAYAN SHARMA VERSUS STATE OF GUJARAT & 3 OTHER (S) [2019 (9) TMI 1049 - GUJARAT HIGH COURT], while interpreting the provisions of Section 48 of the Gujarat VAT Act visavis the provisions of Section 26 of the SARFAESI Act and Section 31B of the RDB Act has held that the first priority over the secured assets shall be of the Bank and not of the State Government on account of Section 48 of the Gujarat VAT ACT, 2003. There is no ambiguity that in view of the provisions of Section 26E of the SARFAESI Act 2002 and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993, a secured creditor has priority over the rights claimed by the Revenue. This Court has no hesitation in holding that the petitioners being “Secured Creditors” have preference over the respondent-State with regard to the debts due from respondent No. 4 - Petition allowed.
|