By C. B. Thakar, Advocate
G. G. Goyal, Janak Vaghani, Chartered Accountants
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Recovery of Sales Tax-Principle of First Charge– Priority of State over Property–Not Applicable to Assets Taken Over by the Tamil Nadu Industrial Investment Corporation–Before the Attachment of Property by The Commercial Tax Officer- Section 29 of The State Financial Corporation Act, 1951 and Tamil Nadu General Sales Tax Act, 1959
Facts
The petitioner purchased the immovable property in a public auction conducted by the Tamil Nadu Industrial Investment Corporation, which had taken possession of the said property u/s. 29 of the State Financial Corporation Act, 1951 from the defaulter. The petitioner lodged the sale deed executed by the Corporation before the sub-registrar for registration. The sub-registrar refused to register the document on the ground that the property is attached by the Commercial Tax Officer to recover sales tax arrears of the defaulter dealer. The petitioner filed a writ petition before the Madras High Court against the refusal of registration of sale deed by the sub-registrar.
Held
It is trite that when the assets are secured assets and in case by invoking section 29 of the State Financial Corporation Act, 1951, the secured creditor takes possession of the property, the principle of first charge/priority of State over the property will not be applicable. Since possession of the property was already taken over by the Corporation by invoking section 29 of the State Financial Corporations Act, 1951, thereafter, there is no question of the attachment of it by the Commercial Tax Officer. Accordingly the High Court allowed the writ petition and directed the sub-registrar to register the sale deed disregarding the order of attachment made by the Commercial Tax Officer.
