Duly served assessment orders are essential before tax recovery; uncommunicated demands cannot sustain attachment proceedings.

Service of a VAT assessment order had to be proved in the manner prescribed by Rule 64 before recovery could proceed under the Revenue Recovery Act. For 2005-06 to 2008-09, service on the company through its director was established, the demand had crystallised, and recovery was permissible. For 2009-10 and 2010-11, the respondents failed to show when, how, or on whom the assessment orders were served; mere assertion of service was insufficient, so attachment and recovery founded on those demands were invalid. The principle stated is that a tax liability cannot be enforced through recovery proceedings unless the assessment creating it has been duly communicated.

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Issues: (i) whether the assessment order for the period 2005-06 to 2008-09 was duly served on the petitioner and could sustain recovery under the Revenue Recovery Act; (ii) whether the assessment orders for the periods 2009-10 and 2010-11 were proved to have been served so as to justify the attachment proceedings under the Revenue Recovery Act.

Issue (i): whether the assessment order for the period 2005-06 to 2008-09 was duly served on the petitioner and could sustain recovery under the Revenue Recovery Act

Analysis: Service of notice or order on a company had to conform to the modes prescribed under Rule 64 of the Telangana VAT Rules. On the record, the assessment order dated 31.03.2011 for 2005-06 to 2008-09 was shown as served on the petitioner through its director. The signature on the order matched the signature on the later representation seeking copies of the assessment orders. The challenge that the order was not served was not specifically denied in the reply affidavit. The order was also not shown to suffer from lack of authority, as the revised assessment was traceable to the amended jurisdictional arrangement under Rule 59.

Conclusion: The assessment order for 2005-06 to 2008-09 was held to have been duly served, and the corresponding demand was treated as crystallized and recoverable against the petitioner.

Issue (ii): whether the assessment orders for the periods 2009-10 and 2010-11 were proved to have been served so as to justify the attachment proceedings under the Revenue Recovery Act

Analysis: The respondents failed to place material showing when, how, or on whom the assessment orders for 2009-10 and 2010-11 were served in any of the modes recognized by Rule 64 of the Telangana VAT Rules. Mere assertion of service, without records evidencing compliance with the statutory mode of service, was insufficient. In the absence of proof of communication of the assessment orders, liability for those periods could not be fastened, and recovery through notices in Form IV and Form V under the Revenue Recovery Act could not stand. The action was inconsistent with the basic requirement that a liability must be communicated before recovery is pursued.

Conclusion: The assessment orders for 2009-10 and 2010-11 were not proved to have been served, and the attachment and recovery proceedings founded on those demands were held invalid.

Final Conclusion: The writ petition succeeded only to the extent of the tax demands for 2009-10 and 2010-11, while the demand for 2005-06 to 2008-09 was left open for lawful recovery in accordance with the order already crystallized for that period.

Ratio Decidendi: A tax liability cannot be enforced through recovery proceedings unless the assessment order creating that liability is shown to have been served in the manner prescribed by law, and statutory recovery based on uncommunicated assessment orders violates natural justice.

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