Wp(C)/34038/2007 Of Sebastian Joseph v. Agricultural Income Tax And Sales Tax Officer (128 Stc 224) To

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.VINOD CHANDRAN TUESDAY, THE 6TH DECEMBER 2011 / 15TH AGRAHAYANA 1933 WP(C).No. 34038 of 2007(B) -------------------------- PETITIONERS: --------------- 1. SEBASTIAN JOSEPH, MANJAKADAMBIL, KAROOR P.O., PALA, KOTTAYAM DISTRICT. 2. SIVADAS V.C., VELLANCHOOR, KAROOR P.O., PALA, KOTTAYAM DISTRICT. BY ADV. SRI.RAJU K.MATHEWS RESPONDENTS: --------------- 1. THE SALES TAX OFFICER, PALA, KOTTAYAM DISTRICT. 2. THE DEPUTY TAHSILDAR (RR) PALA. GOVERNMENT PLEADER SRI. MANOJ P KUNJACHAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: EXT.P1: TRUE COPY OF THE BOND DT. 23.8.93 IN FORM NO.6 UNDERRULE 6(2)(e) OF THE KERALA GENERAL SALES TAX RULESRULE 6(2)(e) OF THE KERALA GENERAL SALES TAX RULES EXT.P2: TRUE COPY OF THE NOTICE NO.B4-13997/05DT. 23.8.2007 OF THESECOND RESPONDENTSECOND RESPONDENT EXT.P2(a): TRUE COPY OF THE NOTICE NO. B4 13997/05 DT 23.8.2007 OFTHE SECOND RESPONDENT UNDER SECTION34 R.R ACTTHE SECOND RESPONDENT UNDER SECTION34 R.R ACT EXT.P3: TRUE COPY OF THE NOTICE NO. B4 13998/05 DT 23.8.2007 OFTHE SECOND RESPONDENTTHE SECOND RESPONDENT EXT.P3(a): TRUE COPY OF THE NOTICE NO. B4 13998/05 DT 23.8.2007 OFTHE SECOND RESPONDENTUNDER SECTION 34 RR ACTTHE SECOND RESPONDENTUNDER SECTION 34 RR ACTEXT.P4: TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 5.9.2005 OF THESECOND RESPONDENTSECOND RESPONDENT EXT.P4(a): TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 5.9.2005 OF THESECOND RESPONDENT UNDER SECTION 34 RR ACTSECOND RESPONDENT UNDER SECTION 34 RR ACT EXT.P5: TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 23.8.2007 OF THESECOND RESPONDENTSECOND RESPONDENT EXT.P5(a): TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 23.8.2007 OF THESECOND RESPONDENT UNDER SECTION 34 RR ACTSECOND RESPONDENT UNDER SECTION 34 RR ACT RESPONDENTS' ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE K. VINOD CHANDRAN, J- - - - - - - - - - - - -- - - - - - - - - - - - - - - -W.P(C) No. 34038 OF 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 6[th] day of December, 2011 J U D G M E N T The petitioners who were sureties of an assesseeunder the KGST Act challenges Exts.P2 to P5 recovery stepstaken for recovery of tax dues of the original assessee. Thepetitioner's contend that on the basis of Ext.P1 bond executedin favour of the department, the department is entitled torecover only an amount of Rs.3 lakhs for which the assesseehas executed bond and the petitioners herein have stood assureties to the said bond. The petitioner's counsel withspecific reference to Ext.P1 would say that the amounts forwhich the petitioners stood as surety is only Rs.3lakhs and thepetitioners jointly and severally are liable only to that extentand no further amounts can be recovered from them. 2. On a reading of Rule 6 of the KGST Rules, Rule 6(1)specifically empowers the assessing authority to direct thefurnishing of a bond by any assessee with two solvent sureties;if the Assessing Officer is of the opinion that such bond withsureties is to be furnished. Rule 6(1) also empowers the 2. On a reading of Rule 6 of the KGST Rules, Rule 6(1)specifically empowers the assessing authority to direct thefurnishing of a bond by any assessee with two solvent sureties;if the Assessing Officer is of the opinion that such bond withsureties is to be furnished. Rule 6(1) also empowers the assessing authority to specify an amount for the bond which asper the Rule should be not exceeding one-half of the taxpayable on the turn over of the dealer for the year asestimated by the Assessing Officer or three monthscompounded amount, in the case of dealers who have opted topay tax under section 7. Obviously, the amounts specified inthe bond is not the same for all the dealers and it is theassessing officer's estimate of the probable tax payable that isthe basis of fixing such amounts. The Assessing Officer also isentitled to call for security of further amounts in the form ofbonds, specifying any larger amount, if in the course ofassessment proceedings or otherwise he is of the opinion thatthe dealers taxable turnover is increasing. In the instant casethe specification of Rs.3 lakhs necessarily is made by theAssessing Officer and the sureties are liable only to the extentspecified in Ext.P1 bond. The petitioners' contentionregarding their limited liability to the extent of the bond has tobe accepted. The petitioners' counsel also points out thedecision reported in Thomas and another v. AgriculturalIncome Tax and Sales Tax Officer (128 STC 224) to WPC.34038/2007 further buttress the contention that the sureties are only liableto the amount specified under the bond. In the circumstances,I allow the writ petition with no order as to costs. Thepetitioner's counsel submits that the conditional interim orderfor the payment of Rs.3 lakhs has been complied with by thepetitioner and the same is admitted by the Government.Hence, no recovery steps can be initiated against thepetitioner as demanded in Exts.P2 to P5 and same shall standset aside. Needless to say the bond executed by thepetitioners as surety will stand discharged. Sd/- (K. VINOD CHANDRAN, JUDGE) jma //True copy// P.A to Judge