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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Honourable Dr Justice ANITA SUMANTH, G. Arul Murugan
Oriental Bank of Commerce, Overseas Branch, represented by its Chief Manager – Appellant
Versus
Commercial Tax Officer, Moore Market (North) Assessment Circle – Respondent
ORDER :
ANITA SUMANTH., J.
The petitioner is a banking company and a Government of India undertaking. It had sanctioned credit facilities to one Aashapuri Industries/R3 towards packing credit and FDBP/FUDBP, vide sanction letter dated 22.03.2002.
2.Overdraft (OD) facility of Rs.57 lakhs was also extended on 01.08.2002 as against Fixed Deposit of Rs.60 lakhs. The OD limit stood enhanced from Rs.57 lakhs to Rs.69 lakhs as against enhanced fixed deposit coverage of Rs.85 lakhs (approx). At the time of extension of packing credit facility, the petitioner had marked a lien in respect of the fixed deposits offered as collateral.
3.While so, it appears that R3 defaulted in payment of sales tax demands in respect of the periods 1996-97 to 2001-02. Thus, the Commercial Taxes Department (‘R1’/‘Department’) had issued communication dated 13.09.2024 accompanied by a statutory notice in Form B-6 of the Tamil Nadu General Sales Tax Act, 1959 ('Act'/'TNGST Act') seeking recovery of the arrears.
4.The bank, in its capacity as a garnishee, had responded to the notice and furnished the details of the fixed deposits held by it with lien. The bank also complied in part, in that, while retaining a sum of Rs
The banking institution's lien on fixed deposits for prior credit facilities takes precedence over subsequent tax demands under the Tamil Nadu General Sales Tax Act.
The court affirmed that earlier registered charges of financial corporations take precedence over later sales tax claims, emphasizing the significance of prior registration dates in determining legal....
The financial institution's charge takes precedence over tax claims due to earlier registration, establishing the priority of charges in property disputes.
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Recovery of Income Tax dues of Borrower - Charge of secured creditor would have priority over Government dues under Income Tax Act - No provision in Income Tax Act which provides for any paramountcy ....
Secured creditors' debts take precedence over state tax claims, as established by Section 26E of the SARFAESI Act.
Secured creditors have priority over State debts under Section 26E of the SARFAESI Act, 2002, invalidating conflicting State charges on mortgaged assets.
Section 26E of the SARFAESI Act establishes that secured creditors have priority over State revenue claims, reinforcing the enforceability of secured debts post-registration.
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