HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Builders Supply Corporation v. Union of India represented by the Commissioner of Income-tax, West Bengal and others
Civil Appeal No. 824 of 1963
[1965] 2 SCR 289 ·
Constitution of India: Article 372(1) · Indian Income-tax Act, 1922: section 46 · Bengal Public Demands Recovery Act: rule 22
Holding and result. The common-law priority of government tax debts applied in British India and continued as law in force under Article 372. Neither section 46 nor the recovery statute displaced it; Revenue had priority over the unsecured creditor.
Sources & disclosures includedDownload original judgment / order
Constitution Bench; judgment delivered by P. B. Gajendragadkar, C.J. · P. B. Gajendragadkar, C.J. · M. Hidayatullah, J. · J. C. Shah, J. · S. M. Sikri, J. · R. S. Bachawat, J.
Assessment years: 1946-47, 1947-48
01 · Facts of the case
An unsecured trade creditor obtained a decree and attached Rs.12,275-9-0 from a contractor’s government security deposit. The Union claimed the fund toward income-tax arrears exceeding Rs.50,000 after a section 46(2) certificate and public-demand recovery proceedings.
02 · Discussion by the Hon’ble Court
The Court traced the adopted common-law priority of Crown tax debts and treated it as law in force under Article 372. Its justification rested on sovereign revenue needs. Section 46 and the recovery legislation supplied procedure, not a contrary statutory ranking, so they did not displace the priority.
Source: Primary judgment: reasoning
03 · Judicial decision
Income-tax arrears owed to the Union took priority over the appellant’s unsecured judgment debt in the attached fund.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
Creditor appeal dismissed with costs.
05 · AKHB REVIEW POINT
AKHB analysis: priority analysis is statute- and security-specific. Identify perfected security, insolvency regime and later legislation before relying on this common-law ruling.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
Historical statutory provisions are described as they appeared in the report. Verify the current enactment, amendments and later judicial treatment before reliance.
Later treatment
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AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.