Section 38-C of the Bombay Sales Tax Act, 1959 creates a first charge on the property of the dealer, which gives priority to the statutory charge over all other charges on the property including a mortgage.

JUDGMENT - Dr. PARATIBHA UPASANI, J.:---This Chamber Summons is taken out by the applicants, namely, the State of Maharashtra, praying inter alia that the applicants be given priority over all other creditors of Konkan Chemicals Pvt. Ltd., a private limited Company which is arraigned as defendant No. 1 in the suit filed by the Bank of Maharashtra against defendant No. 1 and other defendants, and necessary direction in this regard be given to the Court Receiver, High Court. In the alternative, it is prayed that this Court be pleased to permit the applicants to lodge a claim with the Receiver in respect of the arrears of sales tax dues and the Receiver be directed by the Court to decide and consider the claim and the priority of the applicants over the claims of the plaintiff. It is also prayed that the Court Receiver appointed by this Court on 18th March, 1992 and 18th June, 1992 be directed to sell the property in his possession belonging to the 1st defendant viz., Konkan Chemicals Pvt. Ltd. with notice of the said auction sale to the applicants herein.

2. This suit is filed by the plaintiff Bank against the defendants for declaration that the defendants are jointly and severally liable to pay to the plaintiff, a sum of Rs. 71,64,549.63 as per particulars of claim Exhibit-I annexed to the plaint with interest thereon at the rate of 25% per annum with quarterly rests from the date of the filing of the suit till payment or realisation. Other consequential prayers are also sought. It appears from the proceedings that Court Receiver came to be appointed by Mr. Dhanuka, J., by his order dated 18th March, 1992 with respect to the mortgaged property described in Exhibit-D to the plaint and of the hypothecated goods mentioned in Exhibit-B to the plaint with all powers under Order 40, Rule 1 of the Code of Civil Procedure, excluding the power of sale. Thereafter, it appears that decree on admission as against the 1st defendant, in terms of the Minutes by and between the plaintiff and the 1st defendant came to be passed on 18th June, 1992 (Coram : Mr. Jhunjhnuwala, J.,). Suit was kept pending as against other defendants.

3. In the affidavit in support of the present Chamber Summons, the applicants have stated that defendant No. 1 Company was registered under the Bombay Sales Tax Act and the Central Sales Tax Act and was assessed to Sales Tax for the period from 1-5-1986 to 30-4-1987, 1-4-1989 to 31-3-1990, 1-4-1990 to 31-3-1991 and 1-4-1991 to 31-3-1992 and the assessment Order pertaining to the said period was accordingly passed by the Sales Tax Officer, Assistant Commissioner of Sales Tax Assessment. Exhibit-3 annexed to the affidavit in support of the Chamber Summons is the total outstanding dues in the case of defendant No. 1, in view of the assessment orders passed for the relevant period under the Bombay Sales Tax Act and Central Sales Tax Act. It is submitted that the total arrears of Sales Tax dues from defendant No. 1 for assessment for the above stated period is Rs. 69,58,171/-. It is further submitted that the demand notices were issued demanding the arrears of the Sales Tax dues for each of the assessment period and the said demand notices were duly served on defendant No. 1. Thereafter, the applicants tried to take action under section 39 of the Bombay Sales Tax Act and notice was issued under section 39 of the said Act to defendant No. 1 for recovery of the arrears of Sales Tax dues. Thereafter, notice under section 178 of the Maharashtra Land Revenue Code was also issued against defendant No. 1 for recovery of arrears of Sales Tax dues. Thereafter, order of attachment was also issued in respect of the office premises situated at G-1/Court, Chambers, New Marine Lines, Mumbai-400 020 and the said notice was served by the Inspector, who visited the office, of defendant No. 1 at those premises. In view of the appointment of Court Receiver, the factory of defendant No. 1 at Badlapur could not be attached. The Sales Tax Departme

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