Govt Gets Priority On Tax Recovery

IN THE SUPREME COURT

The Supreme Court has ruled that the government's claim to recover taxes took precedence over dues to a bank in proceedings against the property of borrowers mortgaged in favour of the bank.

The court, thus, dismissed the appeal of Dena Bank which claimed that it had precedence over the sales tax dues of a partnership firm. The bank had sued the firm for enforcement of mortgage security.

Meanwhile, the Karnataka government tried to attach the property to recover sales tax. Dena bank claimed that it had precedence over the claim of the state as the property was mortgaged to the bank.

The high court rejected this claim. The bank appealed to the Supreme Court unsuccessfully.

Explaining the legal position, the division bench consisting of Justice S Rajendra Babu and Justice R C Lahoti said: "The principle of priority of government debts is founded on the rule of necessity and public policy.

The basic justification for the claim for priority of state debts rests on the well-recognised principle that the state is entitled to raise money by taxation because unless adequate revenue is received by the state, it would not be able to function as a sovereign government.

It is essential that as a sovereign, the state should be able to discharge its primary governmental functions, and in order to be able to discharge such functions effectively, it must be in possession of necessary funds." Therefore, the state has the right to claim priority in respect of tax dues.

SC to review voting by MPs

The Supreme Court yesterday referred to a Constitution bench the question whether members of Parliament could be prosecuted for voting in a particular way after taking bribe. The court had held in the Jharkhand Mukti Morcha (JMM) case that MPs could not be prosecuted for voting in the House in a particular way because their act was protected by parliamentary privilege recognised in the Constitution.

The new petition filed by the Centre in public interest apparently wants to reopen the issue and lift the immunity granted to MPs against prosecution.

The three-judge bench headed by Justice S B Majumdar accepted the argument of the petitioner that the immunity provision under Article 105(2) of the Constitution needed a second look.

Senior advocate Anil Divan, arguing for the petitioner, submitted that corruption was posing a grave threat to parliamentary democracy.

"I am placing before the court a situation when some MPs give bribe to others to vote in Parliament in a particular manner and if people with criminal backgrounds are put in those positions, they will have little or no respect for the rule of law. This will subvert the very basis of parliamentary democracy," he said.