M/S. ORISSA STATE FINANCIAL CORPORATION vs. COMMNR. OF COMMERCIAL TAXES

C.A. No.-001434-001434 - 2003Supreme Court03 December 20092 pages

For Respondent: KIRTI RENU MISHRA

AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the issue is no longer res integra. It relied on two previous pronouncements. Firstly, in State Bank of Bikaner & Jaipur vs. National Iron & Steel Rolling Corp. & Ors. (1995) 2 SCC 19, a three-Judge Bench had held that the statutory charge created under Section 11-AAAA of the Rajasthan Sales Tax Act, 1954 (which is pari materia to Section 13-B of the Orissa Sales Tax Act, 1947) gives sales tax dues precedence over a mortgage created in favour of a bank. Secondly, in State of M.P. & Anr. vs. State Bank of Indore & Ors. (2002) 10 SCC 441, it was held that a charge created by Section 33C of the M.P. General Sales-Tax Act, 1958, in favour of the State for sales-tax dues, prevails over a charge created by the dealer in favour of the bank for a loan. The Court found no substance in the appeal in view of these decisions. The operative direction was that the appeal stands dismissed.

What were the facts?

The appellant, M/s Orissa State Financial Corporation, filed a civil appeal before the Supreme Court of India. The appeal challenged an order or action by the Commissioner of Commercial Taxes & Ors. The core of the dispute, though not explicitly stated in terms of monetary value, concerns the priority of statutory charges for sales tax dues over charges created in favour of a financial institution. The appellant attempted to rely on observations in Dena Bank Vs. Bhikhabhai Prabhudas Parekh & Co. & Ors. to support its contention. The procedural history leading to this appeal is not detailed.

What were the issues?

1. Whether statutory sales tax dues have precedence over a mortgage created in favour of a bank, in light of Section 11-AAAA of the Rajasthan Sales Tax Act, 1954 (pari materia to Section 13-B of the Orissa Sales Tax Act, 1947)? Assessee's Contention: The appellant (M/s Orissa State Financial Corporation) argued that the issue required consideration, referencing observations in Dena Bank Vs. Bhikhabhai Prabhudas Parekh & Co. & Ors. (2000(5) SCC 694). Revenue's Contention: The revenue's specific arguments are not recorded in the judgment. However, the judgment relies on precedents that support the revenue's position regarding the priority of sales tax dues.

Which sections of the Income-tax Act were involved?

Section 11-AAAA, Section 13-B, Section 33C

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1434 OF 2003 M/s Orissa State Financial Corporation .. Appellant(s) Versus Commnr.of Commericial Taxes & Ors. .. Respondent(s)

O R D E R Parekh & Co. & Ors., 2000(5) SCC 694, the issue raised in the present appeal requires consideration, in our judgment the issue is no more res integra. In State Bank of Bikaner & Jaipur vs. National Iron & Steel Rolling Corp. & Ors., (1995) 2 SCC 19, explaining the scope of Section 11- AAAA of the Rajasthan Sales Tax Act, 1954 (for short, “the Act”) which is pari materia to Section 13-B of the Orissa Sales Tax Act, 1947, a three-Judge Bench of this Court has held that the statutory charge created under Section 11- AAAA of the said Act, the sales tax dues shall have precedence over the mortgage created in favour of the Bank.

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