40. Any tax in default shall be a first charge on all the assets of the defaulter:Provided that -
| (i) such charge shall not extend to or affect any assets sold by such person to a bonafide purchaser for value prior to the seizure of the same in accordance with the provisions of section 42 : |
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| (ii) as regards immovable property, the tax shall not rank in priority to any lease or encumbrance created bona fide for value and registered prior to the date of the seizure ; |
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| (iii) as regards movable property, where the tax for more than four taxable periods is in default, the tax for four taxable periods only to be selected by the Commissioner-General, shall rank in priority to any lien or encumbrance created bonafide for value prior to the date of default of such tax. |
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Sri Lanka Consolidated Acts