9911796707
TMI Blog1972 (10) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the petitioner. On 6th December, 1969, a notice for production of accounts for the year 1969-70 was issued and on the 13th December, 1969, the following order was made: "Please take notice that a sum of Rs. 5,000 has been determined as security payable by you under the Orissa Sales Tax Act, 1947, in view of the fact that no security was paid by you while registration certificate was granted. You are required to pay the above demand of security in the manner prescribed under rule 7-A within 60 days from the date of receipt of this notice failing which the registration certificate granted to you shall be rejected." The petitioner carried a revision before the Commissioner of Sales Tax, opposite party No. 2, but that application was di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that fact was mentioned, but the salesman refused to own the statement by affixing his signature thereto. (c) From the year 1966-67, the demands appear to have been raised against the petitioner. Apart from these, it was stated that the petitioner did not own property within the State and had not offered security at the time of registration and the annual tax liability of the petitioner was gradually rising." Along with the counter-affidavit, the order sheet of the proceeding, which ultimately led to the demand for security has been furnished. A part of the notings made by the officer-in-charge of registration of dealers runs thus: "On perusal of the registration record, it is found that the dealer was granted R. C. under section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defaulter happens to be a registered dealer, cancel the certificate of registration granted to him; or (ii) if the defaulter is a dealer who has applied for registration, refuse to grant him a certificate of registration: Provided that no such cancellation or refusal shall be made unless the dealer has been given a reasonable opportunity of being heard." Rule 7-A of the Rules made under the Act deals with payment of security by registered dealers and provides: "(1) The Sales Tax Officer or the Assistant Sales Tax Officer, as the case may be, for good and sufficient reasons to be recorded, require a registered dealer in writing to pay by a specified date, a reasonable security, which in his opinion, will be equivalent to the tax estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security which is not a fact. Section 9(3a) of the Act does not require every registered dealer to furnish security. Only those dealers, who according to the registering authority for good and sufficient reasons must be made to furnish security, become liable. The registering authority has indicated in this case that the demand of tax may go up to Rs. 3,500. Even if all other conditions were satisfied, reasonable security in terms of the rule should have been only Rs. 3,500 and there can be no basis for demanding security to the tune of Rs. 5,000. The learned standing counsel contended that the quantum of tax payable by the petitioner was on the increase year after year and, therefore, a higher demand of security was warranted. We do not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sticiable. I think that the Legislature would have done well to have provided that the reasons should be recorded in writing, in line with many other enactments of this description. However, if challenged he has to disclose the reasons which will be examined by the court. The second limitation is that it must be 'reasonable security'. This again means that if there is a good or sufficient reason, then the security demanded must be compatible with the reason. If the security is arbitrary, or unconnected with the reason which has impelled the Commissioner to demand security or disproportionately large, then it will be bad." In another portion of the judgment, his Lordship dealt with the requirements of the rule of natural justice of a heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the certificate of registration, which is an eventuality following default in satisfying the demand of security within the appointed time. No provision is made for giving an opportunity to the dealer prior to making of the demand for security. In view of the requirements of the statute and the rule, an enquiry is envisaged and in that enquiry leading to the making of the demand for security, the dealer is certainly entitled to participate and of being heard. That was the view expressed by their Lordships of the Supreme Court which, in our opinion, is not only appropriate but is just and fair. The consequence of non-satisfaction of demand is somewhat serious. In making up the demand, the statute requires good and sufficient reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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