Judgment : G. Rohini, J. The petitioner is a Nationalized Bank. The 3rd respondent herein availed a loan from the petitioner Bank by mortgaging certain immovable properties for securing repayment. Since the 3rd respondent committed default in repayment, the petitioner Bank filed O.S.No.24 of 2004 on the file of the Court of Senior Civil Judge, Suryapet for recovery of money by sale of the mortgaged properties. The said suit was decreed by judgment dated 3.4.2006 and a preliminary decree was passed in favour of the petitioner Bank. Pursuant thereto, the petitioner filed I.A.No.135 of 2008 for a final decree and the same is pending. While so, the 1st respondent – Deputy Commercial Tax Officer issued sale notice dated 18.08.2008 proposing to auction the property mortgaged by the 3rd respondent Bank in favour of the petitioner Bank purportedly under the A.P. Revenue Recovery Act, 1864 (for short, ‘the Revenue Recovery Act’) for recovery of the arrears of commercial tax amount of Rs.1,74,530/-. The petitioner got issued a legal notice dated 28.2.2008 informing the 1st respondent that a preliminary decree has already been passed in its favour on 3.4.2006 in respect of the properties in question and requesting to withdraw the property in question from the auction. However, the 1st respondent by reply notice dated 10.3.2008 contended that the property was attached by them towards arrears of tax dues under Section 27 of the Revenue Recovery Act published in the District Gazette dated 25.1.2008 and thus claimed priority of charge under Section 16C of the A.P. General Sales Tax Act, 1957 (for short, ‘APGST Act’) and Section 26 of the A.P. Value Added Tax Act, 2005 (for short, ‘APVAT Act’) over the property in question under the category of crown debt. Aggrieved by the said action of the 1st respondent, this writ petition is filed seeking a declaration that the proceedings of the 1st respondent dated 22.01.2008 under Section 27 of the RR Act published in Nalgonda District Extraordinary No.392, dated 25.01.2008 attaching the property of the respondent Bank is arbitrary and illegal. The 1st respondent filed a counter contending that the respondent No.3 did business under the name and style of M/s. Pabba Bixamaiah General Merchants and Commission Agent and fell in arrears of tax of Rs.1,74,530/- during the years 1995-96 to 2000-01. The 1st respondent filed a counter contending that the respondent No.3 did business under the name and style of M/s. Pabba Bixamaiah General Merchants and Commission Agent and fell in arrears of tax of Rs.1,74,530/- during the years 1995-96 to 2000-01. In spite of repeated demands, the said dealer failed to clear the above arrears and therefore the action was taken under the provisions of the Revenue Recovery Act and the dealer’s house property was attached and the same was brought to sale in public auction on 26.03.2008 after giving wide publicity in the area. The auction proceedings were conducted in the presence of two employees of Suryapet Municipality and the respondent No.4 herein was declared as the highest bidder for a sum of Rs.5,87,000/-. Accordingly, the respondent No.4 deposited the bid amount on 23.4.2008 and 24.4.2008 i.e., within 30 days as prescribed under Section 36 of the Revenue Recovery Act. It is also stated that the Sub-Registrar, Suryapet issued a certificate stating that the market value of the property is Rs.7,49,139/- for the purpose of registration and their investigations in the local area revealed that the property would fetch Rs.5 lakhs. However, to protect the interest of the petitioner and the Government, the 1st respondent mentioned the estimated value of the property as Rs.9 lakhs in Form-7A notice in the auction conducted on 26.3.2008. The highest bid received was Rs.5,87,000/- and the same was accepted. The allegations of irregularities in conducting auction were denied and it is explained that five persons participated in the auction depositing the earnest money and the 4th respondent offered the highest amount of Rs.5,87,000/-. It is also stated that the 3rd respondent who is defaulter did not raise any objection as regards value and auction proceedings. It is further contended that in terms of Section 16C of the APGST Act any amount of tax, penalty, interest or any other sum payable by the dealer under the said Act shall the first charge on the property of the dealer and therefore the 1st respondent holds priority over all other charges on the property including the mortgage. It is further contended that in terms of Section 16C of the APGST Act any amount of tax, penalty, interest or any other sum payable by the dealer under the said Act shall the first charge on the property of the dealer and therefore the 1st respondent holds priority over all other charges on the property including the mortgage. The respondent No.4 in her counter-affidavit while reiterating the stand taken by the 1st respondent with regard to the legal position that the crown debt will have preference over the other debts whether under the Central or Local Act, further explained that she had complied with all the terms and conditions prior to auction conducted by the respondents 1 & 2 in pursuance of the sale notification dated 18.2.2008 and therefore she is entitled for conveyance of the property. We have heard the learned counsel for both the parties. The facts borne out of the record may be reiterated as under: The petitioner Bank sanctioned loan to the respondent No.3 on 27.2.1997. Even prior to that, the property in question was mortgaged in favour of the petitioner Bank by deposit of title deeds on 27.2.1996. The petitioner bank filed O.S.No.24 of 2004 and a preliminary decree was passed on 3.4.2006. Petitioner’s application for final decree is pending. Coming to the claim of the 1st respondent, the 3rd respondent fell into arrears of payment of commercial tax for the period 1995-96 to 2000-01. Therefore, the property of the 3rd respondent was attached on 22.1.2008 by issuing Form-5 under the Revenue Recovery Act. The same was published in the Gazette, dated 25.1.2008. Subsequently the sale notice was issued on 15.02.2008 and the sale was held on 26.03.2008 in which the respondent No.4 emerged as the successful bidder. From the above, it is clear that the preliminary decree dated 3.4.2006 was granted in favour of the petitioner Bank much prior to attachment effected by the 1st respondent on 22.1.2008. However, the question that requires consideration is whether the 1st respondent is entitled to have precedence over the secured debt created by the 3rd respondent in favour of the petitioner Bank. Section 16-C has been inserted into APGST Act, 1957 by Amendment Act 9 of 1999 w.e.f. 6.4.1999 providing for an absolute precedence to the arrears of tax under the APGST Act. Section 16-C has been inserted into APGST Act, 1957 by Amendment Act 9 of 1999 w.e.f. 6.4.1999 providing for an absolute precedence to the arrears of tax under the APGST Act. For ready reference, Section 16-C may be reproduced hereunder: 16-C. Liability under this Act to be the first charge:- Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of dealer, or such person. A plain reading of the above provision shows that any amount of tax payable by a dealer or any other person under the APGST Act shall be the first charge on the property of the dealer. The vires of Section 16-C was upheld by a Division Bench of this Court in ANDHRA PRADESH STATE FINANCIAL CORPORATION, HYDERABAD & OTHERS v. GOVERNMENT OF ANDHRA PRADESH & OTHERS (2010 (51) APSTJ 117). Having considered the issue whether the liability of the dealer in respect of the tax, penalty, interest or any other sum payable to the State/Commercial/Sales Tax Department under the provisions of the APGST Act has priority, would prevail and have precedence over even on existing secured debt created by such dealer or person in favour of any other individual institution or instrumentality, the Division Bench held: “The policy justification for the impugned provision is the well entrenched common law doctrine of priority of Crown debts. The common law doctrine postulates that the State is entitled to claim, for the recovery of the amount of tax due to it from a citizen precedence and priority over unsecured debts due from the said citizen to his other private creditors. The basic justification for such claim of priority rests on the well recognized principle that the State is entitled to raise money by taxation, otherwise it will not be able to function as a sovereign Government at all. The basic justification for such claim of priority rests on the well recognized principle that the State is entitled to raise money by taxation, otherwise it will not be able to function as a sovereign Government at all. This consideration emphasizes the necessity and wisdom of conceding to the State the right to claim priority in respect of its tax dues.” So far as the effect of the first charge created under Section 16-C in respect of the tax, penalty, interest and any other sum payable under the APGST Act is concerned, in STATE OF M.P. v. STATE BANK OF INDORE (2002) 10 SCC 441)the Apex Court considered an identical statutory first charge created under Section 33-C of the M.P. General Sales Tax Act, 1958 which is in pari materia to Section 16-C of the A.P. General Sales Tax Act, 1957. In the said case, the 2nd respondent therein had obtained a term loan from the State Bank of Indore and executed a promissory note apart from pledging certain machinery to the Bank. While so, the State claimed a first charge upon the machinery in respect of the sales tax dues from the 2nd respondent in priority to the charge held by the Bank. It was held by the Apex Court that the charge created in favour of the State in respect of the sales tax dues prevailed over the charge created in favour of the Bank in respect of the loan taken by the 2nd respondent irrespective of the fact that Section 33-C was inserted w.e.f. 19.01.1976, since section 33-C operated in respect of all charges that were then in force and gave sales tax dues precedence over them. In STATE BANK OF BIKANER & JAIPUR v. NATIONAL IRON & STEEL ROLLING CORPORATION ( (1995) 2 SCC 19 )also the Apex Court considered a similar provision i.e., Section 11AAAA of the Rajasthan Sales Tax Act, 1954 providing for the first charge of the State on the property of the dealer and it was held that charge includes mortgage and therefore a statutory first charge has precedence over an existing mortgage. Rejecting the contention on behalf of the Bank that its dues will have priority because at the time when the statutory first charge came into existence there was already a mortgage in respect of the same property, it was held in STATE BANK OF BIKANER & JAIPUR v. NATIONAL IRON & STEEL ROLLING CORPORATION (3 supra): “8. … The argument though ingenious, will have to be rejected. Where a mortgage is created in respect of any property, undoubtedly, an interest in the property is carved out in favour of the mortgagee. The mortgagor is entitled to redeem his property on payment of the mortgage dues. This does not, however, mean that the property ceases to be the property of the mortgagor. The title to the property remains with the mortgagor. Therefore, when a statutory first charge is created on the property of the dealer, the property subjected to the first charge is the entire property of the dealer. The interest of the mortgagee is not excluded from the first charge. The first charge, therefore, which is created under Section 11-AAAA of the Rajasthan Sales Tax Act will operate on the property as a whole and not only on the equity of redemption as urged by Mr Tarkunde. In CENTRAL BANK OF INDIA v. STATE OF KERALA & OTHERS ( (2009) 4 SCC 94 )the question as to whether Section 38-C of the Bombay Sales Tax Act, 1959 and Section 26-B of the Kerala General Sales Tax Act, 1963 by which a first charge was created on the property of the dealer were inconsistent with the provisions contained in the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, fell for consideration. After reviewing all the decided cases on the issue, the Supreme Court answered the question in negative and held that the Parliament did not intend to give priority to the dues of private creditors over sovereign debt of the State. After reviewing all the decided cases on the issue, the Supreme Court answered the question in negative and held that the Parliament did not intend to give priority to the dues of private creditors over sovereign debt of the State. It was also observed that in the absence of any specific provision to that effect it is not possible to read any conflict or inconsistency or overlapping between the provisions of the DRT Act and Securitisation Act on the one hand and Section 38-C of the Bombay Sales Tax Act and Section 26-C of the Kerala General Sales Tax Act on the other and the non-obstante clauses contained in Section 34 (1) of the DRT Act and Section 35 of the Securitisation Act cannot be invoked for declaring that the first charge created under a State legislation would not operate qua or effect the proceedings initiated by Banks, Financial Institutions and other secured creditors for recovery of their dues or enforcement of security interest as the case might be. As could be seen from the above decisions, the statutory first charge held by the State has been consistently upheld by the Courts. However, the contention of the learned counsel for the petitioner Bank is that Section 16-C of the APGST Act has to be read with Section 17-A and if so read, Section 17-A operates as an exception to the first charge created under Section 16-C in favour of the State. It is to be noticed that Section 17-A was inserted by Act 18 of 1985 w.e.f. 1.7.1985 and the same reads as under: 17-A. Transfer to defraud revenue void:- Where during the pendency of any proceeding under this Act, or after the completion thereof any dealer creates, a charge on, or parts with the possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever of any of his assets in favour of any other person, with the intention to defraud the revenue, such charge or transfer shall be void as against any claim in respect of any tax, or any other sum payable by the dealer as a result of the completion of the said proceeding or otherwise. Provided that, such charge or transfer shall not be void, if it is made,-- (i) for adequate consideration and without notice of the pendency of such proceeding under this Act or, as the case may be, without notice of such tax or other sum payable by the dealer; or (ii) with the previous permission of the assessing authority. Explanation:- In this Section “assets” means land, building, machinery, plant, shares, securities and fixed assets in banks to the extent to which any of the assets aforesaid do not form part of the stock in trade of the business of the dealer. A perusal of the above provision shows that the charge created by the dealer on his assets in favour of any other person with the intention to defraud the revenue shall be void. However, as per the proviso such charge or transfer shall not be void if it is made for adequate consideration and without notice of the pendency of such proceeding under APGST Act. Subsequently, Section 16-C has been inserted by Act 9 of 1999 w.e.f. 6.4.1999 providing for an absolute precedence to the arrears of tax under the APGST Act. The object of insertion of Section 16-C has been explained in the Statement of Objects and Reasons of Act 9 of 1999 as under: “The collection of arrears of sales tax has been posing certain administrative problems. It is noticed that the property attached under Revenue Recovery Act could not be disposed of as it was hypothecated to either financial institutions or to others. In order to have a definite claim on the property, it is now proposed that the liability under the Sales Tax Act shall be the first charge on the property. Similar provision is available in the Rajasthan Sales Tax Act and it was upheld by the Court.” It is no doubt true that Section 17-A appears to have diluted the absolute precedence given to the arrears of tax under Section 16-C, however the principles of statutory interpretation require that the Court in such circumstances must have regard to consequences and has to reject a construction that results in hardship, absurdity or anomaly or which leads to inconsistency in the system which the Statute purports to regulate. [vide Principles of Statutory Interpretation by G.P. Singh ]. [vide Principles of Statutory Interpretation by G.P. Singh ]. As held in STATE OF WEST BENGAL v. UNION OF INDIA (AIR 1963 SC 124)the Court must ascertain the intention of the Legislature by directing its attention not merely to the clauses to be construed but to the entire statute and it must compare the clause with the other parts of law and the setting in which the clause to be interpreted occurs. In CENTRAL BANK OF INDIA v. STATE OF KERALA (4 supra) the Court considered the question whether the non-obstante clauses contained in Section 34 (1) of the DRT Act and Section 35 of the SARFAESI Act can have overriding effect over Section 38-C of the Bombay Sales Tax Act, 1959 and Section 26-B of the Kerala General Sales Tax Act which also contained non-obstante clauses and gave statutory recognition to the priority of the State’s charge over the other debts. After an elaborate discussion, it was concluded that the DRT Act and SARFAESI Act did not create first charge in favour of the Banks, Financial Institutions and other secured creditors and the provisions contained in Section 38-C of the Bombay Sales Tax Act, 1959 and Section 26-B of the Kerala General Sales Tax Act are not inconsistent with the provisions of DRT Act and SARFAESI Act so as to attract non-obstante clauses contained in Section 34(1) of the DRT Act or Section 35 of the SARFAESI Act. In the light of the legal position noticed above, we are unable to accept the contention of the learned counsel for the petitioner that Section 17-A should be read as an exception to Section 16-C of the APGST Act. If the contention of the learned counsel for the petitioner is to be accepted the very purpose of insertion of Section 16-C would be defeated and it would virtually render Section 16-C otiose. It also appears to us that in the light of the Statement of Objects and Reasons of Act 9 of 1999 under which Section 16-A is inserted, the non-obstante clause incorporated in Section 16-C is intended to exclude not only the other statutes but also the other provisions of the APGST Act. It also appears to us that in the light of the Statement of Objects and Reasons of Act 9 of 1999 under which Section 16-A is inserted, the non-obstante clause incorporated in Section 16-C is intended to exclude not only the other statutes but also the other provisions of the APGST Act. In DAMERA RAMAKRISHNA & OTHERS v. COMMERCIAL TAX OFFICER ( 2005 (1) ALT 293 ), cited by the learned counsel for the petitioner the Division Bench of this Court had considered a different issue relating to burden of proof under Section 17-A and did not go into the question as to whether Section 17-A operates as an exception to Section 16 of APGST Act. Hence, the said decision in no way supports the petitioner’s case. For the aforesaid reasons, the Writ Petition is devoid of any merit and the same is accordingly dismissed. No costs. Consequently the miscellaneous petitions, if any, pending in the writ petition shall stand closed.