Mandatory intimation of reduced tax demand governs continued recovery; validating clause does not cure illegal sale proceedings.

After appellate reduction of tax liability, the taxing authority had a mandatory statutory duty to intimate the Tax Recovery Officer of the reduced demand under section 3(b)(ii) of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, because recovery could continue only for the amount actually remaining due. The validating clause in section 3(c) preserved recovery proceedings despite the absence of a fresh notice of demand or variation in assessed amount, but it did not cure non-compliance with the statutory procedure governing continuation after reduction. A sale for recovery of an amount exceeding the liability finally determined was therefore invalid.

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Issues: Whether the failure of the taxing authority to intimate the Tax Recovery Officer about reduction of demand in appeal under section 3(b)(ii) of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 invalidated the continued recovery proceedings and sale, and whether section 3(c) saved such proceedings.

Analysis: The Act was enacted to remove the effect of the decision holding that recovery proceedings based on the original demand could not continue after the appellate reduction of liability. Section 3(c) validates recovery proceedings despite the absence of a fresh notice of demand or variation of the assessed amount, but the continuance of the proceedings after reduction is regulated by section 3(b). The intimation required by section 3(b)(ii) is a positive statutory duty, because the proceedings can continue only for the reduced amount actually remaining due under section 3(b)(iii). A sale held for recovery of an amount in excess of the amount finally payable, without compliance with that statutory duty, is illegal. Section 3(c) does not cure such non-compliance.

Conclusion: The requirement to intimate the Tax Recovery Officer was mandatory, non-compliance invalidated the sale proceedings, and the sale was not saved by section 3(c).

Final Conclusion: The recovery sale was held invalid for want of compliance with the statutory procedure after appellate reduction of the demand, and the challenge to the sale succeeded.

Ratio Decidendi: Where recovery proceedings are continued after an appellate reduction of tax liability, the statutory requirement to intimate the Tax Recovery Officer of the reduced demand is mandatory, and a sale for an amount exceeding the liability finally determined is invalid despite the validating clause.

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