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2015 (6) TMI 81 - PUNJAB & HARYANA HIGH COURT

2015 (6) TMI 81 - PUNJAB & HARYANA HIGH COURT - TMI - Attachment of property - Preferential creditor - Held that:- In the case of Punjab National Bank Vs. The State of Haryana & others [2009 (10) TMI 886 - PUNJAB & HARYANA HIGH COURT], income dues were not given any statutory preference - The statutory preference has been given to the tax arrears under the VAT Act. In view of the Supreme Court judgment in Central Bank of India's case (2009 (2) TMI 451 - SUPREME COURT OF INDIA), we find that the .....

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ta,J. Challenge in the present writ petition is to the communication dated 23.05.2014 (Annexure P-1), whereby the possession of the assets of the borrower were taken by the Collector -cum- Assistant Excise Taxation, Ropar circle, Ropar and the management of the land handed over to the Tehsildar, SAS Nagar. The petitioner, a public sector Bank, advanced loan to respondent No.2 - M/s Sumit Engineering Pvt. Ltd., when the said respondent mortgaged its immovable properties. After the loan was declar .....

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ilable. The property was put to auction on 29.09.2014, but the same could not be auctioned. In the meantime, the petitioner-Bank received a letter dated 07.05.2014 in respect of attachment of the property for recovery of dues of the State under the Punjab Value Added Tax Act, 2005 (for short the VAT Act'). The grievance of the petitioner is that respondent No.1 is a preferential creditor, as against the crown debt, therefore, the property could not be attached in terms of the VAT Act. In the .....

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made to Section 35 of the VAT Act, whereby first charge has been created for the payment of amount of tax, penalty, interest and other sum payable. The relevant Section 35 of the VAT Act reads as under: "35. Notwithstanding anything to the contrary contained in any contract or law for the time being in force, any amount of tax, penalty, interest and any other sum, payable by a taxable, registered or any other person under this Act, shall be the first charge on the property of such person fr .....

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others (2015) 2 SCC 1. On the other hand, Mr. Bhardwaj, learned Additional Advocate General, Haryana representing respondent No.1 - State, apart from relying upon the judgment in Central Bank of India's case (supra), referred to judgments of Division Bench of this Court in CWP No.3875 of 2005 titled Punjab State Industrial Development Corporation Vs. Union of India' decided on 30.01.2007 and CWP No.2431 of 2009 titled Axis Bank Ltd. Vs. The Commissioner of Income Tax, Ludhiana & ano .....

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e payment of arrears of tax as preferential dues. The Bench held that the reliance on the provisions of Section 61 of the VAT Act are unwarranted, as the said provisions only contemplate that all arrears of tax and other amount due at the commencement of the VAT could be recovered if the same had accrued under the VAT Act, but there is no provision in the Haryana General Sales Tax Act corresponding to Section 26 of the VAT Act giving preference to the dues of the State. The relevant extract from .....

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sputed that there is no provision in the HGST Act corresponding to Section 26 of the VAT Act. Therefore, Section 26 of VAT Act cannot be read as part of HGST Act because Section 61 is aimed at asserting only those rights which have accrued under the HGST Act. There is no charge created on a property as has been created by Section 26 of VAT Act. Therefore, by no stretch of imagination, it could be assumed that the arrears of tax under the HGST Act could be recovered by creating a charge over the .....

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held to the following effect: "158. On the basis of above discussion, we hold that the DRT Act and Securitisation Act do not create first charge in favour of banks, financial institutions and other secured creditors and the provisions contained in Section 38C of the Bombay Act and Section 26B of the Kerala Act are not inconsistent with the provisions of the DRT Act and Securitisation Act so as to attract non obstante clauses contained in Section 34(1) of the DRT Act or Section 35 of the Sec .....

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dent upon statute and whether or not the agreement or lien is made fully effective by statute." Based on this it was further argued that such lien would not include any lien provided by or dependent on an agreement to give security, whether or not such lien is also provided by or dependent upon statute, and whether or not such lien is made fully effective by statute. 39. The first thing to be noticed is that the Income Tax Act does not provide for any paramountcy of dues by way of income ta .....

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