Retained tax recovery lacks legal basis once the assessment is set aside and no fresh demand exists

Money recovered in certificate proceedings could not be retained after the foundational assessment order was set aside in appeal and no fresh assessment creating an enforceable demand was yet in force. The pendency of a proposed or future reassessment did not provide a legal basis to withhold the recovered sum. The amount already realised from the applicant's bank account was therefore held to lack lawful support for retention and was required to be refunded to the applicants.

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Issues: Whether the amount recovered from the applicant's bank account under the certificate proceeding could be retained after the original assessment order had been set aside and no fresh assessment had yet been made.

Analysis: The assessment order on the basis of which recovery was initiated had already been set aside in appeal, and the proposed fresh assessment had not yet resulted in any enforceable demand. In those circumstances, the amount already recovered and lying with the respondents had no valid or legal basis for retention. The pendency of a fresh assessment proceeding could not justify withholding the recovered sum until a future order was passed.

Conclusion: The recovered amount was required to be refunded to the applicants.

Ratio Decidendi: Money recovered in certificate proceedings cannot be retained once the foundational assessment has been set aside and no fresh assessment creating a lawful demand is in force.

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