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2018 (12) TMI 146 - HC - VAT and Sales TaxPreference of Charge on Mortgaged property - TNGST Act - who holds first charge as to whether the crown debt / the revenue to the government under the fiscal laws or the claim of secured creditors under SARFESAI Act? - Held that:- The issue is laid to rest by the decision of the Hon'ble Supreme Court in the case of Central Bank of India vs. State of Kerala & Others [2009 (2) TMI 451 - SUPREME COURT OF INDIA] where it was held that the statutory charge prevail over mortgage charge over any pledged property. The crown debt is treated as unsecured and mortgage rights will get priority only when the statute does not create a charge under the Act. It is also settled that the non obstante clauses of the Tamil Nadu General Sales Tax Act, 1959, and the SARFESAI Act are not at conflict with each other as both the statutes can be given effect harmoniously through purposive interpretation. Accordingly, those statutes under which a charge is created on the assets will have priority over mortgage rights under any other Act. And those statutes where charges are not created will be accorded a status of unsecured debts and will have low priority over the secured creditors under the SARFESAI Act - The Tamil Nadu General Sales Tax Act, 1959, having created charge on the assets of the assessee by virtue of Section 24, the interest of revenue cannot be separated from the assets of the defaulters. Petition dismissed - decided against petitioner.
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