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TMI Blog1972 (5) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... r-firm. After remand, the Assessing Authority passed an order dated 5th August, 1971, directing Shri Surinder Kumar Jain, partner of the firm to furnish a cash security of Rs. 2,50,000.00 in any of the forms provided in sub-rules (a), (b) and (c) of rule 4-A of the Punjab General Sales Tax Rules, 1949, within ten days for grant of registration certificate. Against that order, the petitioner-firm filed an appeal which was dismissed by the Deputy Excise and Taxation Commissioner by order dated 14th September, 1971. The petitioner filed a second appeal before the Sales Tax Tribunal which was decided on 30th November, 1971, and the amount of security deposit was reduced from Rs. 2,50,000.00 to Rs 50,000.00, which was directed to be deposited in cash. The petitioner has challenged the orders of respondents 1 to 3 by means of this petition to which a written statement has been filed by the said respondents. The principal point argued by the learned counsel for the petitioner is that under section 9 of the Act a reasonable security has to be demanded from a dealer as a condition of the issue of a registration certificate. This section reads as under: "9. Security from certain class of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curity deposit of Rs. 50,000.00 is out of all proportions to the business being done by the petitioner-firm and it amounts to a denial of the right to carry on business under article 19 of the Constitution of India. Under that article a reasonable restriction can be placed but not such a restriction which makes it impossible for a person to carry on any business. The firm was established only on 4th May, 1971, and to demand a cash security of Rs. 50,000.00 is to cripple its finances and to force it to close its doors. With a capital of Rs. 16,000.00 it is impossible for the petitioner-firm to deposit a cash security of Rs. 50,000.00. The order of the Sales Tax Tribunal is, therefore, termed as unreasonable and arbitrary. In answer to the submissions made by the learned counsel for the petitioner it has been stressed on behalf of the respondents that the partners of the firm are the wife and sons of Shri J. K. Jain, who was one of the directors of M/s. New India Motors Pvt. Ltd., which defaulted in the payment of sales tax to the Chandigarh administration to the tune of about Rs. 20 lacs, although the amount was realised by it from the customers. The Chandigarh administration is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale proceeds in the Government Treasury by the Commissioner, Chandigarh, vide order dated 5th April, 1971. Shri J. K. Jain sold all the spare parts amounting to Rs. 20,362.06 to M/s. Jay Kay Motors, S. C. 0. No. 16-17, Sector 28-C, Chandigarh, at 5 per cent. to 30 per cent. discount of the book value of the spare parts, and that the present business is going to be run with the help of the money of which Government have been defrauded by M/s. New India Motors Pvt. Ltd., Chandigarh, and that Shri J. K. Jain may again use similar tactics to deprive the sales tax department of its legitimate dues. (e) The basis of the demand of the sum of Rs. 2,50,000.00 as cash security has been disclosed in the report of the Assessing Authority dated 9th November, 1971, annexure D to the petition. The dealer was given the option to deposit the amount of security in the form of Post Office Savings Bank and pledge the pass book to the Commissioner or in the form of bank guarantee in which case he would have got interest on the amount deposited. (f) The demand of security depends mainly upon the nature of business and possible turnover. In this case the nature of business and possible turnover o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f business of the petitioner-firm had been fixed and the balance of the security amount had been allowed to be furnished in the form allowed under rule 4-A(d) of the Rules, that is, by accepting a personal bond and sureties of other solvent dealers. The learned counsel for the petitioner has offered to deposit a security of Rs. 10,000.00 in the form of bank guarantee and a further security of Rs. 1 lac by filing a personal bond and the securities of two registered dealers carrying on business in Chandigarh, whose names he mentioned as M/s. Ram Chandra and Sons and M/s. Baij Nath Ashrafi Lal. The demand of cash security of Rs. 50,000.00 appears to me to be very excessive and out of all proportions with the taxable turnover of the petitioner-firm, which has been disclosed by the first year's working. It may be noticed here that in the case of Nand Lal Raj Kishan[1961] 12 S.T.C. 324 (S.C.). , a cash security of Rs. 5,000.00 was demanded on the following grounds: "In view of the reputation that the dealer enjoys in the market, namely, that he being a commission agent has been engaged in the business of selling goods to other commission agents, all sales being effected to unscrupulous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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