Secured Creditor Will Have Precedence Over Govt. Tax Dues

In Superintendent Central Excise & Customs the current appeal has been filed after a decade since the last order dated January 03, 2011 by the Revenue to recover its dues from the property whose rights were given to M/S Kotak Mahindra Bank Ltd under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The Respondent was made a secured creditor of M/s Amod Petrochem Private Limited when it fell into a difficult financial position. While the Respondent’s debt was crystallized and steps were taken for attachment of properties under Section 14 of  On the other hand, the Excise Department raised demands for evasion of duty from M/s Amod Petrochem Private Limited.

The matter went to the Hon’ble Supreme Court of India wherein a Single Judge bench vide its order dated September 17, 2010 allowed the Appeal in favour the Respondent with regard to nature, title and possession in respect of the immovable property. The matter has thereby been brought up again from the side of the Revenue since the last order dated January 03, 2011 wherein leave was granted to the Respondent.The Hon’ble Supreme in the current matter observed that there was indeed a creation of a secured debt in favour of the State Bank of India which was later transferred to the Respondent. Noted, the Respondent cannot be prevented from exercising its rights as a secured creditor on the pretext that there was a debt to the Excise Government arising from a confiscation order.

1.  tax rebate for senior citizens or super senior citizens
2.  reduction in chargeable income for premium paid on life insurance and health insurance
3. deduction for providing additional employment such as section 80JJAA
4.  deduction in respect of undertakings located in SEZ or North-Eastern States as contained in sections 10AA and 10C
5.  deduction for power-generating companies and infrastructure undertakings as contained in section 80-IA besides many other incentive provisions contained in the statute. Similarly, to tame the taxpayers to have transparent transactions
6. Further noted that in case there is any amount left after the realisation of the dues of the Respondent, that surplus fund can further be utilized to satisfy the dues of the Department. Also remarked, since it has been a decade there would have been a real estate escalation of the Immovable property at hand which may in turn result in satisfaction of everybody’s claim i.e the Department as well as the Respondent.

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.