Agricultural income-tax charge depends on valid demand notice; prior purchase defeated recovery against the property.

A first charge for agricultural income-tax arrears arises only after a valid demand notice is served under the Kerala Agricultural Income-tax Act, and tax becomes payable only on an assessment order or return in accordance with the Act. Because no demand notice was served on the assessee, no statutory charge attached to the property. The petitioner had purchased the property before proceedings against the third respondent began, so the asset was not subject to pending tax recovery when acquired. Section 62(3) did not apply because there was no post-commencement transfer intended to evade tax, and the recovery notices were therefore unsustainable.

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Issues: Whether revenue recovery proceedings could be sustained against the petitioner's property for agricultural income-tax arrears allegedly due from the third respondent, and whether a statutory first charge arose under the Act in the absence of service of a demand notice and in view of the petitioner's prior purchase of the property.

Analysis: Section 35 of the Kerala Agricultural Income-tax Act, 1991 permits assessment on the person assessable to tax, and section 39(4) authorises best judgment assessment where a return is not filed. Under section 45, tax becomes payable only on an order passed under the Act or on a return filed, and the Agricultural Income-tax Officer must serve a notice of demand together with a copy of the order. The statutory first charge under section 45(2) arises only when such demand is served. On the admitted facts, no demand notice was served on the assessee. The petitioner had purchased the property in 1996, whereas proceedings against the third respondent commenced only in 1999, so the property was not subject to any pending tax proceedings when the petitioner acquired it. Section 62(3) also did not apply, because there was no transfer after the commencement of proceedings with intent to evade tax.

Conclusion: The revenue recovery proceedings against the petitioner's property were illegal, no statutory charge attached to the property for the third respondent's arrears, and the impugned notices were liable to be quashed in favour of the petitioner.

Ratio Decidendi: A first charge for agricultural income-tax arrears arises only after a valid demand notice is served under the Act, and property transferred before the initiation of proceedings cannot be proceeded against absent the statutory conditions for charge or avoidance being satisfied.

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