Recovery notice under sales tax law invalid where no assessment demand existed and court stay on recovery remained in force.

Section 25 of the Kerala General Sales Tax Act, 1963 could be invoked only to recover amounts already due as arrears of tax or other sums, and liability arose only after an assessment order and the consequential demand notice were served. Because no assessment order or demand notice had been issued, no amount could be treated as due from the dealer. The notice freezing payments and insisting on a clearance certificate was also issued despite a subsisting court stay on recovery proceedings, so the exercise of power was improper and without authority. The notice was therefore unauthorised and illegal, and its quashing was upheld.

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Issues: Whether a notice issued under section 25 of the Kerala General Sales Tax Act, 1963, freezing payments to the assessee and requiring production of a clearance certificate, was valid when no assessment order or demand notice had been served and recovery proceedings were already stayed by the Court.

Analysis: The power under section 25 is available only for realising amounts due from a dealer by way of arrears of tax or other amounts. Such liability becomes due only after an assessment order is passed and the consequential notice of demand is served. In the absence of any assessment order or demand notice, no amount could be treated as due from the dealer. The notice was also issued despite an existing stay order from the Court against recovery proceedings. On these facts, the exercise of power under section 25 was improper and without authority.

Conclusion: The notice was unauthorised and illegal, and the quashing of the notice was ; the appeal failed.

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