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2022 (5) TMI 1360 - HC - VAT and Sales TaxAttachment of property - default in repayment of loan amount - case of bank is that State has got its charge mutated in the revenue records with respect to the dues to be recovered from the original borrowers towards VAT - HELD THAT:- It is the case of the bank that in accordance with the provisions of the SARFAESI Act, more particularly, Section-26E and also, in view of the two pronouncements of this High Court one in the case of BANK OF INDIA VERSUS STATE OF GUJARAT & 3 OTHER (S) [2020 (1) TMI 1197 - GUJARAT HIGH COURT]; and another in the case of KALUPUR COMMERCIAL CO-OPERATIVE BANK LTD. VERSUS STATE OF GUJARAT [2019 (9) TMI 1018 - GUJARAT HIGH COURT], the bank will have the first precedence and the department cannot put forward its claim for the purpose of recovering the dues towards VAT. What came to be purchased by the writ-applicant in the auction proceedings conducted by the Bank of Baroda was a secured asset under the provisions of the SARFAESI Act. In such circumstances, the State cannot claim preference over the subject property for the purpose of recovery of the dues towards tax. It is not in dispute that the first charge was created in favour of the bank and the bank in exercise of its powers under the SARFAESI Act, put the subject property to auction. It is hereby declared that the State cannot claim any first charge over the subject property on the strength of Section-48 of the GVAT Act, 2003. The respondent no.6 is directed to post and certify a mutation entry to record the certificate of sale by the writ-applicant – bank in favour of the respondent no.5 with respect to the subject property - Application allowed.
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