Summary:
The Gujarat High Court has ruled that secured creditors like banks would have priority over the government to sell secured assets of loan defaulters for the recovery of their dues. Notably, the company had defaulted on both loan repayment to the bank and value-added tax (VAT) payable to the government. The commercial tax department of the state government also issued property attachment orders in July 2017 and subsequently, an auction notice on August 20, 2018, for recovery of tax dues from the firm. It was argued that the provisions in SARFAESI Act supersede the provisions of the Gujarat Value Added Tax (GVAT) Act. It also remarked that the government cannot claim precedence on the strength of GVAT Act as against the provisions of SARFAESI Act..