Reduced tax liability and recovery proceedings: mandatory intimation of the revised amount is required before continuing sale proceedings.

Where tax liability is reduced in revision, recovery proceedings may continue on the earlier recovery basis only for the reduced amount and from the prior stage, but the taxing authority must intimate the assessee of the reduction and, if a recovery certificate has issued, also the recovery authority. A fresh notice of demand is not required under the governing Kerala validation statute, yet compliance with the intimation requirement is mandatory. Because the reduced amount was not shown to have been intimated after the revisional orders, continued sale proceedings on the basis of the earlier attachment could not be sustained. The sale notice was therefore invalid and annulled.

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Issues: Whether, after reduction of the tax liability in revision, the recovery authorities could continue proceedings on the basis of the earlier notice of demand and attachment without serving a fresh notice of demand or giving intimation of the reduced amount, and whether the sale notice issued in the recovery proceedings was valid.

Analysis: The governing provision was section 3(1)(b) of the Kerala Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1967. Under clause (i), a fresh notice of demand was not required when the dues were reduced in appeal or revision. However, clause (ii) made it mandatory for the taxing authority to intimate the assessee of the reduction and, where a recovery certificate had been issued, also the recovery authority. Clause (iii) permitted continuation of the existing recovery proceedings only in relation to the reduced amount and from the stage at which they stood before disposal of the appeal or revision. On the facts, no material showed that the reduced amount had been intimated to the assessee or the recovery authority after the revisional orders. That omission was fatal to the continued pursuit of sale proceedings on the basis of the earlier attachment.

Conclusion: The sale notice was invalid and was annulled for non-compliance with the mandatory intimation requirement, though recovery could be continued later in accordance with the statute after due intimation of the reduced amount.

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