Procedure for recovery of tax for the purposes of sections 413 and 475

This is an overview of a long rule of 95 sub-rules. Read the bare Rules for the detail.

Starting recovery (sub-rules 1 to 5). Once the Tax Recovery Officer draws up a certificate under section 413, a notice is served requiring the defaulter to pay within fifteen days of service, failing which steps are taken under the rule. No step in execution is taken before the fifteen days have elapsed, except that if the Officer is satisfied the defaulter is likely to conceal, remove or dispose of movable property, an attachment can be directed at any time for reasons recorded in writing, and is cancelled if the defaulter furnishes satisfactory security. If the amount is not paid, the Officer may recover by attachment and sale of movable property, attachment and sale of immovable property, arrest and detention in prison, or appointing a receiver. Interest under section 411(3) and the charges of notices, warrants and proceedings are also recoverable.

Effect and bars (sub-rules 6 to 12, 16 to 20). The purchaser acquires only the defaulter's right, title and interest at the time of sale; for immovable property, once the sale is absolute, it is deemed to have vested from the time of the sale. Questions between the Tax Recovery Officer and the defaulter on execution are decided by the Officer, not by suit, except on the ground of fraud. Property exempt from attachment under the Code of Civil Procedure, 1908 is exempt here, and the Officer investigates claims and objections to attachment or sale. Proceeds are applied first to the certificate and costs, then to other sums due under the Act, with the balance paid to the defaulter. After the notice, the defaulter cannot mortgage, charge, lease or otherwise deal with property without the Officer's permission, and a private transfer contrary to an attachment is void. Officers involved in a sale cannot bid or buy, no sale takes place on a Sunday or holiday, police assistance can be sought, and the Officer may entrust functions to a lower officer not lower than an Inspector with the Joint Commissioner's approval.

Movable property (sub-rules 21 to 47). A warrant is served and the property attached — by actual seizure for property in the defaulter's possession, by affixing the warrant for agricultural produce, by written prohibitory order for debts, shares and property in another's hands, by request to the court for a decree, by notice for co-owned or partnership interests, and by attachment as in Order 21, rule 48 of the Code of Civil Procedure for a Government servant's salary. An inventory is prepared; the attachment must not be excessive and must be made between sunrise and sunset; doors may be broken open on reasonable grounds with notice, with facility for women to withdraw. A sale is by public auction after a proclamation in the language of the district, not before fifteen days from the affixing of the proclamation (except for perishable property or where the cost of keeping exceeds its value) without the defaulter's written consent; payment is at the time of sale, and a certificate follows. Negotiable instruments and shares may be sold through a broker. Coins and notes attached may be credited to the Central Government.

Immovable property (sub-rules 48 to 70). Attachment is by an order prohibiting transfer or charge, proclaimed on or near the property and relating back to the date the payment notice was served. A sale proclamation states the property, assessed revenue, the amount to be recovered, any reserve price and other material facts, and is made by beat of drum or other customary mode, with optional gazette or newspaper publication. No sale takes place before thirty days from the affixing of the proclamation without the defaulter's written consent; it is by public auction, subject to confirmation and to any reserve price. The purchaser pays 25% of the price immediately and the balance within fifteen days of the sale; on default the deposit may be forfeited and the property resold on a fresh proclamation. The defaulter or an affected person may apply within thirty days to set the sale aside on deposit of the amount in the proclamation with interest at 15% per annum plus a 5% penalty to the purchaser, or on the ground of non-service of the notice or a material irregularity that caused substantial injury, and the purchaser may apply within thirty days on the ground that the defaulter had no saleable interest. The sale is then confirmed and becomes absolute and a certificate is issued. The Assessing Officer, if authorised, may bid for the Central Government where a reserve price was not met, and may accept the property in satisfaction of the arrears at an agreed price. No sale of attached immovable property is made after seven years from the end of the financial year in which the order giving rise to the demand became final, extendable by the Board for up to three more years, with specified exclusions and an extension for resales.

Receivers, arrest and detention (sub-rules 71 to 83, 91). The Tax Recovery Officer may attach a business or immovable property and appoint a receiver. Arrest and detention in civil prison require a notice to show cause and findings of dishonest transfer or concealment, or of means to pay and refusal, though a warrant may be issued if the defaulter is likely to abscond. A person arrested must be brought before the Officer within twenty-four hours, may be left in custody for up to fifteen days to raise the arrears, and may be detained for up to six months where the certificate is for more than Rs. 250 and otherwise for six weeks; the defaulter is released on payment, on disclosing all property in good faith, or on grounds of illness. No dwelling house is entered after sunset or before sunrise, and the Officer cannot order the arrest and detention of a woman, a minor or a person of unsound mind.

Other provisions (sub-rules 84 to 95). Officers are deemed to act judicially and have a Civil Court's powers to take evidence. A certificate continues after the defaulter's death, against the legal representative. An appeal from an original order lies to the Chief Commissioner or Commissioner within thirty days, with execution stayed only if the appellate authority so directs; an order may be reviewed for a mistake apparent from the record; a surety may be proceeded against as the defaulter. The Board may specify forms, issue guidelines, and remove difficulties, and nothing in the rule affects a provision under which the tax is a first charge on an asset.