2012 (10) TMI 964 - HC - VAT and Sales Tax

Non serving of notice - surety bond - jurisdiction of civil court - Held that - Concurrent finding recorded by the courts below regarding service of the notice by plaintiff on contesting defendants, is fully justified by the evidence on record. The said finding is not shown to be perverse or illegal or based on misreading or misappreciation of the evidence on record. Consequently there is no ground to interfere with the said finding. It is undisputed that as per terms and conditions of the surety bond furnished by the plaintiff, the plaintiff had right to withdraw its surety bond by serving notice of six months. Consequently after service of aforesaid notice by plaintiff on contesting defendants, the plaintiff no longer remained surety for defendant No. 4 since after June 26, 1992 on expiry of the notice period of six months. The disputed liability admittedly relates to the period thereafter. Consequently the plaintiff is not liable to satisfy the said liability of defendant No. 4. When the plaintiff is neither dealer nor surety nor assessee, the plaintiff is not amenable to the jurisdiction of defendants Nos. 1 to 3 under the Act. Consequently, entire action of defendants Nos. 1 to 3 is illegal and against statutory provisions and therefore, jurisdiction of civil court to challenge the said action is not barred, notwithstanding the provisions of section 62 of the Act. Appeal dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Liability of the plaintiff as surety for sales tax dues.
3. Dispute over the withdrawal of the surety bond.
4. Jurisdiction of the civil court in the matter.

Condonation of Delay:
The delay of 128 days in filing the appeal was condoned by the court based on the reasons mentioned in the application, which was accompanied by an affidavit. The application for condonation was allowed, and the delay was thus considered justified.

Liability of Plaintiff as Surety:
The plaintiff stood surety for a private dealer (assessee) for its sales tax liability under the Haryana General Sales Tax Act. The defendants demanded payment of the sales tax amount from the plaintiff as surety. The plaintiff challenged this demand, asserting that it had withdrawn its surety bond as per the terms and conditions by serving a notice. The courts below decreed in favor of the plaintiff, holding that the plaintiff was not liable to pay the amount due from the assessee.

Dispute Over Surety Bond Withdrawal:
The defendants contested the suit by denying receipt of the notice from the plaintiff withdrawing the surety bond. However, the plaintiff presented evidence in the form of a stamped and signed letter dated December 26, 1991, which was received by the assessing authority of the defendants. The courts found the evidence presented by the plaintiff to be credible and unrebutted, leading to a conclusion that the plaintiff was no longer the surety for the assessee after the notice period lapsed.

Jurisdiction of Civil Court:
The appellants argued that the jurisdiction of the civil court was barred by section 62 of the Act. However, the court rejected this argument, stating that the plaintiff, not being a dealer, surety, or assessee, was not subject to the jurisdiction of the defendants under the Act. The court deemed the actions of the defendants illegal and against statutory provisions, allowing the civil court to challenge the said actions. Consequently, the jurisdiction of the civil court was not barred.

In conclusion, the court found no merit in the second appeal, stating that no substantial question of law arose for determination. The appeal was dismissed, upholding the decisions of the courts below in favor of the plaintiff regarding the withdrawal of the surety bond and the liability for the sales tax dues.