IFCI LTD Vs. COMMERCIAL TAXES OFFICER

JUDGEMENT

(1.) The petitioner seeks to raise a question of law as to whether by virtue of the deeming provisions contained in Section 9(2) of the Central Sales Tax Act, 1956 ("the CST Act' for short), there is any first charge on the property of the dealer. The petitioner being a financial institution holding a decree against the dealer claims absence of such first charge in view of there being no specific provision in the CST Act though the petitioner does not dispute such first charge in respect of the amount due under the Rajasthan Sales Tax Act, 1994 ("the RST Act' for short).

(2.) The petitioner is a public financial institution incorporated under the Companies Act, 1956 which had advanced loan facilities to M/s West Indian Gas Products Limited guaranteed by certain guarantors. The said entity also took loans from other banks and financial institutions, but failed to maintain financial discipline. The petitioner along with ICICI filed an OA before the DRT, Jaipur and in those proceedings a recovery certificate was issued for an amount of Rs.44,78,65,444/- on 20.12.2000. The said certificate was thereafter sought to be executed. It is during the pendency of the execution proceedings that the respondent, Commercial Taxes Officer, Special Circle, Udaipur filed an application dated 01.06.2004 before the Recovery Officer seeking right of first appropriation from the amounts released by sale of assets of the debtor towards discharge of statutory liability of Rs.60,86,172/- under the RST Act and Rs.44,04,415/- under the CST Act totaling to Rs.1,08,73,587/- and interest due thereon.

(3.) Such a right of first appropriation insofar as the dues under the RST Act are concerned, was claimed on the basis of Section 50 of the RST Act, which reads as under: