The Company under liquidation owed to the Govt of Madhya Pradesh (''appellant”) a sum of Rs. 1,40,60,422/- towards sales tax, central tax and entry tax dues payable for its Morena unit and Gwalior unit.The official liquidator ranked the appellant as preferential creditor. Against this ranking the appellant came in appeal contending that in terms of the provisions of 33C of M.P. General Sales Act,1958 and Section 53 of M.P. Commercial Tax Act, 1994, any amount of tax/penalty/interest payable by a dealer or other person under this Act shall be first charge on the property of the dealer or such person and as such he be treated pari-passu with the secured creditors.Decision: Appeal dismissed. Reason:
The claims made by the appellant relate to his tax dues which as per his appeal would categorize under section 53 of M.P. Commercial Tax Act, 1994. Section 53 of M.P. Commercial Tax Act, 1994 clearly stipulates that it is subject to the provisions of Section 530 of Companies Act, 1956.
- The tax Liability as claimed by appellant falls within Section 530(1)(a) which is subject to the provisions of section 529A.
According to Section 529A, notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, the dues of the workmen and debts due to the secured creditors to the extent that such debts rank under clause (c) of the provision to sub-section (1) of section 529 shall be paid pari-passu and in priority to all other debts.
Provisions of Section 529A of Companies Act override the provisions of section 53 of M.P. Commercial Tax Act, 1994 under which appellant is claiming his right.
As Sections 529A, 530, 530(1)(a) of the Companies Act, 1956 are read with section 53 of M.P. Commercial Tax Act, 1994 there appears to be no conflict between State Act and the Central Act. Even if there is a conflict between a State legislation and a Central legislation, the Central legislation must prevail.