#Statutory Charge

The NCLAT has ruled that under Section 48 of the Gujarat Value Added Tax Act, 2003, state tax authorities hold a statutory first charge over assets for VAT arrears, granting them secured creditor status in corporate insolvency proceedings - but this protection does not extend to CST dues. This clarifies the hierarchy of claims in liquidation and impacts how resolution professionals prioritize tax liabilities under Section 53 of the IBC.

The NCLAT has ruled that unsecured state tax dues, including Haryana VAT, cannot claim priority as secured creditors under Section 53 of the IBC merely by virtue of statutory charge - only creditors with actual security interest qualify. This clarifies the hierarchy in liquidation distributions and impacts all state revenue departments seeking recovery from insolvent corporate estates.