TMI BlogTHE FIFTH SCHEDULE - PROCEDURE FOR RECOVERY OF TAXX X X X Extracts X X X X X X X X Extracts X X X X ..... pay the amount specified in the certificate within fifteen days from the date of service of the notice. (2) The notice under sub-rule (1) shall also intimate to the defaulter that steps would be taken to realize the amount under this Schedule, if he defaults to make payment within the time specified therein. When certificate may be executed. 3. (1) No step in execution of a certificate shall be taken until the period of fifteen days has elapsed since the date of the service of the notice required by the preceding rule. (2) However, the Tax Recovery Officer may attach the whole, or any part, of the movable property of the defaulter, as would be liable to attachment in execution of a decree of a civil court, within the said period of fifteen days if,- (a) he is satisfied, for reasons to be recorded in writing, that the defaulter is likely to conceal, remove or dispose of the whole, or any part, of the movable property; and (b) the realization of the amount of the certificate would in consequence be delayed or obstructed. (3) The defaulter whose property has been so attached may furnish security to the satisfaction of the Tax Recovery Officer and on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of plaintiff. 7. (1) No suit shall be maintained against any person claiming title under a purchase certified by the Tax Recovery Officer in the manner laid down in this Schedule, on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims. (2) Nothing in this section shall bar a suit to obtain a declaration that the name of any purchaser certified as aforesaid was inserted in the certificate fraudulently or without the consent of the real purchaser, or interfere with the right of a third person to proceed against that property, though ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such third person against the real owner. Disposal of proceeds of execution. 8. (1) Whenever assets are realised by sale, or otherwise, in execution of a certificate, the proceeds shall be disposed of in the following manner, namely :- (a) they shall first be adjusted towards the amount due under the certificate in execution of which the assets were realised and the costs incurred in the course of such execution; (b) if there remains a balance afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, or was possessed of, the property in question- (a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the date of the attachment. (5) The Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale if, upon the said investigation, he is satisfied that, for the reason stated in the claim or objection, such property- (a) was not, at the said date, in the possession of the defaulter or of some person in trust for him; (b) was not in the occupancy of a tenant or other person paying rent to the defaulter; or (c) being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, . (6) The Tax Recovery Officer shall disallow the claim, if, for reasons to be recorded in writing, he is satisfied that the property was (a) at the said date, in the possession of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tax Recovery Officer. (3) Where a sale of immovable property is adjourned under sub-rule (1) for a longer period than one calendar month, a fresh proclamation of sale under this Schedule shall be made unless the defaulter consents to waive it. (4) Every sale shall be stopped if, before the lot is knocked down, the arrears and costs (including the costs of the sale) are tendered to the officer conducting the sale, or proof is given to his satisfaction that the amount of such arrears and costs has been paid to the Tax Recovery Officer who ordered the sale. Private alienation to be void in certain cases. 16. (1) Where a notice has been served on a defaulter under rule 2, the defaulter, or his representative in interest, shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money. (2) Where an attachment has been made under this Schedule, any private transfer, or delivery, of the property attached or of any interest therein and any payment to the defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attached is movable property (other than agricultural produce) in the possession of the defaulter, the attachment shall be made by actual seizure, and the officer shall keep the property in his own custody or the custody of one of his subordinates and shall be responsible for due custody thereof: (2) The officer referred in sub-rule (1) may sell the property seized at once, if- (a) the property seized is subject to speedy and natural decay; or (b) the expense of keeping the seized property in custody is likely to exceed its value. Agricultural produce. 25. (1) Where the property to be attached is agricultural produce the attachment shall be made by affixing a copy of the warrant of attachment- (a) where such produce is growing crop,-on the land on which such crop has grown; or (b) where such produce has been cut or gathered,-on the threshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited; (2) A copy of warrant of attachment, where the property to be attached is agricultural produce, shall also affixed on the outer door or on some other conspicuous part of the house in which the defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except property deposited in, or in the custody of, any court, the attachment shall be made by a written order prohibiting,- (a) in the case of the debt-the creditor from recovering the debt and the debtor from making payment thereof until the further order of the Tax Recovery Officer; (b) in the case of the share-the person in whose name the share may be standing from transferring the same or receiving any dividend thereon; (c) in the case of the other movable property (except as aforesaid)-the person in possession of the same from giving it over to the defaulter. (2) A copy of such order shall be affixed on some conspicuous part of the office of the Tax Recovery Officer, and another copy shall be sent, in the case of the debt, to the debtor, in the case of the share, to the proper officer of the corporation, and in the case of the other movable property (except as aforesaid), to the person in possession of the same. (3) A debtor prohibited under clause (i) of sub-rule (1) may pay the amount of his debt to the Tax Recovery Officer, and such payment shall discharge him as effectually as payment to the party entitled to receive the same. Attachment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Officer by whom the notice is issued. (2) Where the property is in the custody of a court, any question of title or priority arising between the Tax Recovery Officer and any other person, not being the defaulter, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by the court. Attachment of partnership property. 33. (1) Where the property to be attached consists of an interest of the defaulter, being a partner, in the partnership property, the Tax Recovery Officer may make an order charging the share of such partner in the partnership property and profits with payment of the amount due under the certificate. (2) The Tax Recovery Officer may, by the order referred to in sub-rule(1) or any subsequent order, appoint a receiver of the share of such partner in the profits, whether already declared or accruing and of any other money which may become due to him in respect of the partnership, and direct accounts and inquiries and make an order for the sale of such interest or such other order as the circumstances of the case may require. (3) The other persons shall be at liberty at any time to redeem th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r may direct. (2) A copy of the proclamation shall also be affixed in a conspicuous part of the office of the Tax Recovery Officer. Sale after fifteen days. 41. Except where the property is subject to speedy and natural decay, or when the expense of keeping it in custody is likely to exceed its value, no sale of movable property under this Schedule shall, without the consent in writing of the defaulter, take place until after the expiry of at least fifteen days calculated from the date on which a copy of the sale proclamation was affixed in the office of the Tax Recovery Officer. Sale of agricultural produce. 42. (1) Where the property to be sold is agricultural produce, the sale shall be held,- (a) if such produce is a growing crop-on or near the land on which such crop has grown, or (b) if such produce has been cut or gathered-at or near the threshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited. (2) However, the Tax Recovery Officer may direct the sale to be held at the nearest place of public resort, if he is of opinion that the produce is thereby likely to sell to greater advantage. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ularity not to vitiate sale, but any person injured may sue. 46. No irregularity in publishing, or conducting, the sale of movable property shall vitiate the sale, but any person sustaining substantial injury by reason of such irregularity at the hand of any other person may institute a suit in a civil court against him for compensation, or (if such other person is the purchaser) for the recovery of the specific property and for compensation in default of such recovery. Negotiable instruments and shares in a corporation. 47. The Tax Recovery Officer may, regardless of anything to the contrary contained in this Schedule, authorise the sale of any property, which is a negotiable instrument or a share in a corporation, through a broker instead of directing the sale to be made by public auction. Order for payment of coin or currency notes to the Assessing Officer. 48. Where the property attached is current coin or currency notes, the Tax Recovery Officer may, at any time during the continuance of the attachment, direct that such coins or notes shall be credited to the Central Government and the amount so credited shall be dealt with in the manner specified in rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed on a conspicuous part of the property and also upon a conspicuous part of the office of the Tax Recovery Officer. (2) Where the Tax Recovery Officer so directs, such proclamation shall also be published in the Official Gazette or in a local newspaper, or in both; and the cost of such publication shall be deemed to be costs of the sale. (3) Where the property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot, unless proper notice of the sale cannot, in the opinion of the Tax Recovery Officer, otherwise be given. Time of sale 56. No sale of immovable property under this Schedule shall, without the consent in writing of the defaulter, take place until after the expiration of at least thirty days calculated from the date on which a copy of the proclamation of sale has been affixed on the property or in the office of the Tax Recovery Officer, whichever is later. Sale to be by auction 57. (1) The sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer. (2) However, no sale under this rule shall be made, if the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iting- (a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of one and one-fourth per cent for every month or part of a month, calculated from the date of the proclamation of sale to the date when the deposit is made; and (b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee. (2) Where a person makes an application under rule 62 for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule. Application to set aside sale of immovable property on ground of non-service of notice or irregularity . 62. (1) Where immovable property has been sold in execution of a certificate, such Income-tax Officer as may be authorised by the Chief Commissioner or Commissioner in this behalf, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt due under certificate. 67. (1) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that there is reason to believe that the amount of the certificate may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of any other immovable property of the defaulter, the Tax Recovery Officer may, on his application, postpone the sale of the property comprised in the order for sale, on such terms, and for such period as he thinks proper, to enable him to raise the amount. (2) In such case, the Tax Recovery Officer shall grant a certificate to the defaulter, authorising him, within a period to be mentioned therein, and regardless anything contained in this Schedule, to make the proposed mortgage, lease or sale. (3) All moneys payable under the mortgage, lease or sale referred to in sub-rule (2) shall be paid to the Tax Recovery Officer and not to the defaulter. (4) No mortgage, lease or sale under this rule shall become absolute until it has been confirmed by the Tax Recovery Officer. Fresh proclamation before re-sale. 68. Every re-sale of immovable property, in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the recovery of which the immovable property has been attached, has become final in terms of the provision of sub-chapter D of Chapter X. (2) The period of limitation referred to in sub-rule (1) shall stand extended by one year, if the immovable property is required to be re-sold- (a) due to the amount of highest bid being less than the reserve price; (b) under the circumstances mentioned in rule 58 or rule 59; or (c) due to the sale being set aside under rule 62. (3) In computing the period of limitation under sub-rule (1), the following period shall be excluded:- (a) the period during which the levy of the aforesaid tax, interest, fine, penalty or any other sum is stayed by an order or injunction of any court; (b) the period during which the proceedings of attachment or sale of the immovable property are stayed by an order or injunction of any court; or (c) the period commencing from the date of the presentation of any appeal against the order passed by the Tax Recovery Officer under this Schedule and ending on the day the appeal is decided. (4) Where immediately after the exclusion of the period referred in sub-rule (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DETENTION OF THE DEFAULTER Notice to show cause 76. (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison. (2) The provisions of sub-rule (1) shall not apply if the Tax Recovery Officer, for reasons recorded in writing, is satisfied- (a) that the defaulter has, with the object or effect of obstructing the execution of the certificate, after the drawing up of the certificate by the Tax Recovery Officer, dishonestly transferred, concealed, or removed any part of his property; or (b) that the defaulter has, or has had since the drawing up of the certificate by the Tax Recovery Officer, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. (3) A warrant for the arrest of the defaulter may, regardless of anything contained in sub-rule (1), be issued by the Tax Recovery Officer, if he is satisfied, by affidavit or otherwise, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exceeding 15 days; or (b) releasing him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance at the expiration of the specified period if the arrears are not so satisfied. (3) The Tax Recovery Officer shall direct the release of the defaulter, who is under arrest, if he does not make an order of detention under sub-rule (1). Detention in and release from prison. 80. (1) Every person detained in the civil prison in execution of a certificate may be so detained,- (a) where the certificate is for a demand of an amount exceeding two hundred and fifty rupees-for a period of six months;and (b) in any other case-for a period of six weeks. (2) However, he shall be released from such detention- (a) on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison, or (b) on the request of the Tax Recovery Officer on any ground other than the grounds mentioned in rules 78 and 79. (3) A defaulter released from detention under this rule shall not,- (a) be discharged from his liability for the arrears merely by reason of his release; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the country, does not appear in public, shall be entered into unless the officer authorised to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing. Prohibition against arrest of women or minors, etc. 84. The Tax Recovery Officer shall not order the arrest and detention in the civil prison of- (a) a woman; or (b) any person who, in his opinion, is a minor or of unsound mind. PART VI MISCELLANEOUS Officers deemed to be acting judicially. 85. Every Chief Commissioner, Commissioner, Tax Recovery Officer or other officer acting under this Schedule shall, in the discharge of his functions under this Schedule, be deemed to be acting judicially within the meaning of the Judicial Officers Protection Act, 1850. Power to take evidence. 86. Every Chief Commissioner, Commissioner, Tax Recovery Officer or other officer acting under the provisions of this Schedule shall have the powers of a civil court while trying a suit for the purpose of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling the production of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not be detained in the civil prison or arrested on account of any sum so payable. Forms. 93. The Board may prescribe the form to be used for any order, notice, warrant, or certificate to be issued under this Schedule. Power to make rules. 94. (1) The Board may make rules, consistent with the provisions of this Act, for regulating the procedure to be followed by Chief Commissioners, Commissioners, Tax Recovery Officers and other officers acting under this Schedule. (2) In particular, and without prejudice to the generality of the power conferred by sub-rule (1), such rules may provide for all, or any of, the following matters, namely:- (a) the area within which Chief Commissioners, Commissioners or Tax Recovery Officers may exercise jurisdiction; (b) the manner in which any property sold under this Schedule may be delivered; (c) the execution of a document or the endorsement of a negotiable instrument or a share in a corporation, by or on behalf of the Tax Recovery Officer, where such execution, or endorsement, is required to transfer such negotiable instrument, or share, to a person who has purchased it under a sale under this Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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