In Brief
The Supreme Court examined two sets of civil appeals concerning the validity of section 16-B of the Himachal Pradesh General Sales Tax Act (HPGST), which creates a first charge on property for tax dues. The High Court had declared this section ultra vires, relying on section 35 of the SARFAESI Act. The Court held that one writ petition had become infructuous when the plaintiff-bank recovered its dues and released the mortgaged property, making the constitutional declaration unnecessary. The Court declared section 16-B valid, holding that Parliament did not intend to grant priority to private secured creditors over the State's statutory charge. Additionally, the Court confirmed that the State's first charge operates only after proper determination of liability under statutory procedures, which had not occurred. The dismissal of the recall application was upheld as the writ petition had been decided on merits in the State's presence.
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