Invalid service of demand notice vitiates auction recovery, while interest appropriation remains within revenue discretion and refund follows.

Where a statutory demand notice is a precondition to attachment and sale, failure to prove valid service on the defaulter vitiates the subsequent auction process, including the notice and Gazette publication. The text also states that interference is not ordinarily warranted with the levy or appropriation of interest on sales tax arrears, since appropriation between principal and interest lies within the revenue authority's discretion, though reduction of interest may be sought before the authorities. Once the auction is set aside for want of proper notice, the auction purchaser is entitled to restitution of the sale consideration, with any separate claim for interest to be pursued in appropriate proceedings.

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Issues: (i) Whether the auction notice and subsequent sale proceedings were vitiated for service of notice under the statutory demand provisions before attachment and sale; (ii) whether interference was warranted with the levy and appropriation of interest on the sales tax arrears; (iii) whether the auction purchaser was entitled to refund of the sale consideration after the auction proceedings were set aside.

Issue (i): Whether the auction notice and subsequent sale proceedings were vitiated for service of notice under the statutory demand provisions before attachment and sale.

Analysis: The statutory scheme required service of demand notice before attachment and sale. The record did not show valid delivery of notice to the defaulter's family member, authorised agent, or proper proof of service by affixture in the manner required by law. In the absence of due service, the affected party could not be faulted for non-payment, and the steps taken thereafter were unsustainable.

Conclusion: The notice in Form Nos. 7 and 7A and its Gazette publication were liable to be set aside, and the consequent auction proceedings were invalid.

Issue (ii): Whether interference was warranted with the levy and appropriation of interest on the sales tax arrears.

Analysis: The rate of interest charged on overdue sales tax was not shown to be disproportionate so as to justify writ interference. The manner in which the amount deposited was to be appropriated between principal and interest was a matter within the creditor's discretion, and the Court declined to prescribe the appropriation. At the same time, liberty could be granted to seek reduction of interest before the revenue authorities.

Conclusion: No writ relief was granted against the levy or appropriation of interest, though liberty was reserved to seek reduction before the authorities.

Issue (iii): Whether the auction purchaser was entitled to refund of the sale consideration after the auction proceedings were set aside.

Analysis: Once the auction notices and sale process were interfered with, the amount deposited by the auction purchaser could not be retained by the revenue. The purchaser was entitled to restitution, with the right to pursue interest separately in appropriate proceedings.

Conclusion: The sale consideration was directed to be refunded to the auction purchaser forthwith.

Final Conclusion: The writ petitions were disposed of with partial relief to the petitioners: the sale process was invalidated for want of proper notice, the attachment was continued subject to compliance, the interest issue was left to the revenue authorities, and the auction purchaser was granted refund of the amount deposited.

Ratio Decidendi: Where the statute makes prior service of demand notice a condition for coercive recovery, failure to prove such service vitiates the consequential auction proceedings, while questions of appropriation of payments and reduction of interest remain within the revenue authority's lawful discretion.

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