Dy.Commr.Of Income Tax vs State Bank Of India & Ors

The Supreme Court addressed the appeals against the Special Court's order under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, which directed the appellant to deposit Rs. 546.22 crores with interest. The Court held that the Special Court improperly scaled down the priority tax demand by reviewing assessment orders, which contravened the precedent set in Harshad S. Mehta v. Custodian & Ors. [(1998) 5 SCC 1]. The Court emphasized that the Income Tax Department has the first right on the appropriation of Harshad S. Mehta's assets under Section 11(2)(a) of the Act, thereby reinforcing the priority of tax claims in such cases.