(1) Notwithstanding anything contained in any law or contract to the contrary, the Assessing Authority may at any time or from time to time , by notice in writing (a copy of which shall be forwarded to the dealer at his last known address) require any person who holds or may subsequently hold any money for, or on account of any dealer who has failed to pay tax, interest or penalty under the Act, to pay into Government treasury in the manner specified in the notice, either forthwith or upon the money becoming due or being held, or within the time specified in the notice not being before money becomes due or is held, so much of the money as is sufficient to pay the amount of tax including interest due from the dealer or penalty or both, as the case may be, under the Act, or the whole of the money when it is less than that amount.

(2) The Assessing Authority may from time to time, amend or revoke any notice issued under sub-section (1) or extend the time for making the payments in pursuance of such notice.

(3) Any person making any payment in compliance with a notice issued under sub section (1) shall be deemed to have made the payment under the authority of the dealer and the receipt from the Government Treasury shall construe a good and sufficient discharge of the liability of such person to the dealer to the extent of the amount specified in the receipt.

(4) Any person discharging liability to the dealer, after service on him of the notice issued under sub-section (1) shall, if the liability is discharged in any manner other than that required under the said notice, be personally liable to the Government to the extent of the liability discharged or to the extent of the liability of the dealer for tax or penalty, or both, whichever is less.

(5) Where a person on whom a notice is served under sub-section (1) proves to the satisfaction of the Assessing Authority that the money demanded or any part thereof were not due to the dealer, or that he did not hold any money for or on account of the dealer, at the time the notice was served on him; nor is the money demanded or any part thereof likely to become due to the dealer or to be held on account of the dealer, then such person shall not be liable to pay into Government Treasury any such money or part thereof.

(6) Any amount of money which a person is required to pay under sub-section (1) or for which he is personally liable under sub-section (4) shall, if it remains unpaid, be recoverable in the same manner as provided under sub-section(6) of section 44:

Provided that nothing in this section shall operate to effect any action taken or prevent any action that may be or is being taken under section 44 for recovery from the dealer the amount due from him.

(7) The Assessing Authority may apply to the court in whose custody there is a money belonging to the assessee for the payment to him of the entire amount of such money, or if it is more than the amount due from the assessee under the Act, the amount sufficient to discharge such liability.

(8) Save as otherwise provided in this section, every person to whom a notice is issued under sub-section (1) shall be bound to comply with such notice and in particular, where such notice is issued to a Post office, Banking Company or Insurer, it shall not be necessary for any pass books, policy or any other document to be produced for the purpose of any entry, endorsement or like being made before payment is made notwithstanding any rule, practice or requirement to the contrary.

Explanation: For the purpose of this section the amount due to an assessee shall be computed after taking into account such claims as may have fallen due for payment by such assessee and may be lawfully subsisting.

(9) No proceeding for the recovery of any sum payable under the Act shall be commenced after the expiry of two years from the last date of the financial year in which assessment is made, or in the case of a person who is deemed to be an assessee in default under sub-section (6) after the expiry of one year from the last date of financial year in which he is deemed to be an assessee in default.

Explanation I: The period of one year referred to in sub-section (9) shall be reckoned -

(i) where the date of payment of tax has been extended to another date, from the last day of the financial year in which such date falls;

(ii) where a sum payable is allowed to be paid in instalments from the last day of the financial year in which the last of such installments is due; and

(iii) where recovery proceedings in a case have been stayed by an order of the court from the last day of the financial year in which the order is withdrawn.

Explanation II: The proceedings for the recovery of any sum shall be deemed to have been commenced within the meaning of this section, if some action is taken to recover the whole or any part of the sum within the period hereinbefore specified to, by any mode of recovery under the Act.