Case Law Details
Indian Overseas Bank Vs Deputy Commissioner of State Tax (Bombay High Court)
MVAT authorities doesn’t have priority in recourse to assets that are secured in favour of secured creditor: Bombay HC
Bombay High Court held that MVAT Authorities would not have priority in the recourse to the assets that are secured in favour of the secured creditor and registered in priority with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).
Facts- This petition challenges attachments of assets made, and consequential actions taken, by Respondent No. 1, Deputy Commissioner of State Tax, GST Department, Government of Maharashtra and Respondent No. 2, the State Tax Officer, Raigad Division, under the Maharashtra Value Added Tax Act, 2002. Such attachment and consequential enforcement are directed against immovable property that was mortgaged way back in 2014, by Respondent No.3, Savair Energy Ltd. (“Borrower”) in favour of a consortium of banks led by the Petitioner, Indian Overseas Bank (“IOB”).
Conclusion- Held that the only effect of the interplay between Section 26E of the SARFAESI Act and Section 37 of the MVAT Act would be that MVAT Authorities would not have priority in the recourse to the assets that are secured in favour of the secured creditor and registered in priority with CERSAI. The MVAT Authorities would be free to chase other properties of the assessee that are not the subject matter of a security interest registered ahead of their attachment. If there are no assets left to chase, the MVAT Authorities would still be unsecured creditors, with a right to continue proceedings to recover their dues in accordance with law.
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