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2020 (6) TMI 85 - HC - VAT and Sales TaxPayment of amount due to the Government - priority of charge arising out of sales tax arrears, vis-a-vis the arrears due to others including the petitioner mortgagee - sale of the defaulter's properties - creation of rights between the mortgagor and mortgagee bank - right in personam - HELD THAT:- Definitely, the sales tax arrears take precedence over the claims of an existing mortgagee also. In the present case, the respondent issued the notice along with Form B6 on 18.09.2006 to the petitioner, demanding the arrears of sales tax to the tune of ₹ 4,80,05,508/- payable by the company, which, according to the petitioner, was received only on 12.10.2006. In the mean while, the auction was confirmed in favour of M/s.Annam Steels Pvt. Ltd and the sale certificate was issued to them under the SARFAESI Act on 26.09.2006 and the available sale proceeds were distributed to all the secured creditors and the other lenders by 30.09.2006. But, in terms of the decision in STATE BANK OF BIKANER AND JAIPUR VERSUS NATIONAL IRON AND STEEL ROLLING CORPORATION AND OTHERS [1994 (12) TMI 72 - SUPREME COURT], the demand raised by the respondent prior to the appropriation of the sale proceeds, will have precedence over the claims of the petitioner - mortgagee. Hence, the petitioner is bound to pay the sale proceeds realised by them towards partial fulfillment of the demand raised by the respondent - Petition dismissed.
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