THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.8665 of 2007 Dated:25.07.2011 Between: Bank of Baroda. … Petitio And The Commercial Tax Officer, Peddapuram Circle, Peddapuram, East Godavari District, and others. ... Responde THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.8665 of 2007 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) Bank of Baroda, Kakinada Branch, Hyderabad, has filed the instant petition aggrieved by the action of the second respondent in proclaiming sal the property, in D.No.8-103 on land admeasuring Ac.1.05 cents R.S.No.156/4, 155/1, 152/5 & 276/2 situated at G.Medapadu, Samalkot Man East Godavari District, in view of the sale notice dated 12.03.2007, as ille and arbitrary and to set aside the same. A consequential direction is a sought to respondent Nos.1, 2 and 6 not to auction the properties of respond Nos.3 to 5 which have been mortgaged to the Bank pending recov proceedings being initiated by the Bank before the Debts Recovery Tribu Visakhapatnam in RP No.25 of 2005, or in pursuance of the proceedi initiated under the Securitization and Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002, by the Bank. The petitioner, statedly, advanced loans to respondent Nos.3 to 5. borrowers defaulted. The petitioner, therefore, filed an application, be O.A.No.159 of 2004, before the Debts Recovery Tribunal, Visakhapatn which granted a recovery certificate in favour of the Bank. Respondent Nos. 5 mortgaged the property. Despite several demands, respondent Nos.3 to 5 not repay the amount due to the Bank. Petitioner also initiated proceedi under the provisions of the Securitization and Reconstruction of Finan Assets and Enforcement of Security Interest Act, and took possession of mortgaged properties. The same were put to auction on two occasions, bu one participated in the bidding and the properties, statedly, are in possessio the petitioner. Petitioner also filed R.P.No.25 of 2005 seeking execution of Recovery Certificate issued in O.A.No.159 of 2004, which is still pending be the Debts Recovery Tribunal. Meanwhile, so as to recover the arrears of sales tax under the And Pradesh General Sales Tax Act, 1957 (APGST Act), the second respond issued the impugned notice of sale of land. The petitioner contends that all properties of respondent Nos.3 to 5 have been mortgaged/hypothecated; t have first charge over the properties and, therefore, they cannot be auctioned recovery of arrears of sales tax. The first respondent filed a counter affidavit. It is stated that respond Nos.3 to 5, who did business in paddy and rice, fell in arrears of tax. The respondent also relies on Section 16-C of the APGST Act, as inserted A.P.Amendment Act, 1999, which is to the effect that any amount of tax, pena interest payable by a dealer under the APGST Act shall be a first charge on property of the dealer, or the person who is in arrears of sales tax. This Court heard the Counsel for the petitioner and the Special Coun for Commercial Taxes. The Special Counsel brought to the notice of this C the decision of the Supreme Court in Central Bank of India v State Kerala[1] and the decision of the Division Bench of this Court in And Pradesh State Financial Corporation v Government of Andhra Pradesh In Andhra Pradesh State Financial Corporation Section 16-C of APGST Act was impeached as ultra vires. Following Central Bank of In this Court held that the first charge created by the State Sales Tax Act will h primacy and will prevail over a decree obtained by a Bank; and that Section C of the APGST Act is valid and impeccable. Therefore, the auction impug cannot be faulted. The writ petition is devoid of any merit and is, accordingly, dismiss There shall be no order as to costs. _____________ (V.V.S. RAO ____________________________ (RAMESH RANGANATHAN 25.07.2011 vs [1] (2009) 4 SCC 94 [2] (2010) 51 APSTJ 117