Law:

Section:

Section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings Act, 1964 - Recovery of tax - Whether where after imitation of recovery proceedings demand is reduced in appeal, though issuance of fresh notice of demand and recovery certificate is not required and original recovery certificate is not required, and original recovery proceedings is to be continued - Held, yes - Whether in such case original recovery proceedings should only for amount finally remains due after its reduction in appeal - Held, yes FACTS A certificate of recovery for Rs. 33,695 was sent by the Taxing authorities to the TRO. On the assessees appeal, the amount of penalty was reduced. However the TRO proceeded with the sale on the basis of the recovery certificate issued by the taxing authority for Rs. 33,695 and conducted the sale. In the instant writ, the assessee challenged the validity of the sale proceedings on the ground that no fresh notice of demand was issued to him after the amount had been reduced in appeal, and that the sale had been held for an amount in excess of what was recoverable from him on the date of the sale. HELD The effect of the provisions of section 3 and section 5 is to dispense with the need of issuing a fresh notice of demand and the recovery certificate and to allow the original recovery proceedings to continue, but only for the amount found due after reduction in the appeal, and it is for this purpose that the taxing authority is required to send intimation of the fact of the reduction to the assessee and to the TRO. As the proceedings for recovery can be continued only for the amount that finally remains due, and not for any amount in excess thereof, the requirement of sending intimation to the TRO becomes essential duty of the taxing authority and must be held to be a mandatory condition. Non-compliance of that condition will be an illegality in the procedure and will invalidate the proceedings. A sale held in proceedings initiated and continued for the recovery of an amount in excess of the amount payable by the assessee, after its reduction in appeal, will be invalid. Such a sale is not validated by clause (c ) of section 3. The…

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