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TMI Blog2016 (9) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... e the respondents from proceeding against the partnership firm, or its partners, for recovery of the balance arrears of tax due - petition disposed off - decided in favor of petitioner. - Writ Petition No. 9629 of 2015 - - - Dated:- 23-8-2016 - ACJ Ramesh Ranganathan And Sri U. Durga Prasad Rao, JJ. For the Petitioner: Dr. S.R.R. Viswanath For the Respondents : Sri Shaik Jeelani Basha, Learned Special Standing Counsel for Commercial Taxes (AP) ORDER ( Per the Hon ble The Acting Chief Justice Ramesh Ranganathan ) The proceedings under challenge in this Writ Petition is the attachment notice in Form-5 dated 31.03.2015 issued by the first respondent. The validity of this notice is questioned as being contrary to Section 12 read with Rule 28(8) of the Andhra Pradesh General Sales Tax Act and Rules, 1957 and contrary to the law laid down by this Court in New Kamal Bar and Caf v. State of Andhra Pradesh (2006) 42 APSTJ 77. In the affidavit filed in support of the Writ Petition, the petitioner states that she is living in house bearing No.3-8-23 along with her son, daughter-in-law and grandson; she does not have any other property, and is eking out her liveliho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship firm; the tax dues were however determined by the 2nd respondent on a best judgment assessment; as the firm had paid the tax, her liability as a surety was nil; an assessment order was passed on 14.03.2001 though the firm had stopped business earlier; and she came to know of the demand only in the year 2014. According to the petitioner, in view of the law laid down by this Court in New Kamal Bar and Cafe1, her liability as a surety was only to discharge the tax liability for a year as estimated in the Form-A return; attachment of her dwelling house, without furnishing a copy of the Form-A return, was illegal; her liability as a surety was only to the extent of the admitted tax liability of ₹ 64,791/-, and not on the turnover determined under best judgment assessment; the respondents had not raised a demand for 14 years after the assessment order; and they were guilty of action and omissions inconsistent with the rights of a surety. In the counter-affidavit filed by the 2nd respondent, it is stated that the petitioner was a surety whose residential house was furnished as surety for the partnership firm vide surety bond dated 13.10.1997 submitted to the registering a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 8,000/-, and her liability as a surety was only to that extent; the Form A application, for registration under Section 7(1)/7(2) of the CST Act, is different; the Form A, as prescribed under Rule 9 of the APGST Rules, was filed estimating the tax due as ₹ 8,000/-; the practice of the department is to insist on security or surety only to the extent of ₹ 6,000/-; the circular issued by the Commissioner of Commercial Taxes dated 21.07.1997 makes it clear that the departmental authorities could not demand security/surety for an amount exceeding ₹ 6,000/-; column 19 of the Form-D application speaks of the estimated total turnover; while security/surety can be demanded under Section 12(11), read with Rules 9 and 28(8), the surety shall not exceed the amount equal to the tax payable under the Act for the year as estimated; failure of the registering authority, to estimate the tax payable under the Act for a year, absolved the petitioner of her liability as held by this Court in R. Dandayudhapani v. Commercial Tax Officer (2014) 59 APSTJ 130 ; while the term total turnover includes turnover which is exempt from tax, the term turnover represents the taxable turnover; S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld refer to Rule 28(8) of the APGST Rules and Column 19 of Form D in support of his submission that the liability of the surety is for payment of the tax dues of the firm for one year; and, as the firm had estimated its turnover as ₹ 20,00,000/-, the surety was liable to discharge this liability of the firm for the first assessment year. Learned Standing Counsel would rely on Sunkara Narayanamma v. The Deputy Commercial Tax Officer ((2015) 61 APSTJ 246); and Gullapudi Someswara Rao v. The Commissioner of Commercial Taxes [(judgment in WP No.17017 of 2002 dated 12.04.2005)]. As the assessment order passed on 14.03.2001, for the assessment years 1997-98 and 1998-99, has attained finality since the assessee-dealer has not chosen to prefer an appeal thereagainst, we see no reason to now examine its validity, more than fourteen years after it was passed, that too at the behest of the surety. The submissions made on the merits of the assessment order, therefore, necessitate rejection. Reliance placed by Dr. S.R.R. Vishwanath, on the Circular of the Commissioner, Commercial Taxes dated 21.07.1997, to contend that it is only the security deposit of ₹ 6,000/- which can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration shall be made to the prescribed authority in such manner and within such time as may be prescribed. Under Section 12(7), where it appears necessary to the authority to whom an application is made under sub-section (6) so to do for the proper realisation of the tax and other dues payable under the APGST Act, or for the proper custody and use of the forms referred to in the APGST Act, the rules made and the notifications issued thereunder, he may, by order in writing and for reasons to be recorded therein, impose, as a condition for the issue of a certificate of registration, a requirement that the dealer shall furnish in the prescribed manner, and within such time as may be specified in the order, such security as may be specified for all or any of the aforesaid purposes. Rule 28(1) of the APGST Rules stipulated that every dealer, liable to get himself registered under sub-section (1) of Section 12 of the Act, shall submit an application for registration to the registering authority. Rule 28(6) provided that every application for registration, under sub-rules (1) to (5), shall be made in Form D. Rule 28(8) enabled the registering authority to require an applicant for reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath, Learned Counsel for the petitioner, would submit that the surety is required to be furnished only on the estimated turnover, and not on the estimated total turnover of a dealer for the year, it is necessary to note that the prescribed Form D did not require the applicant to furnish information regarding the estimated turnover, but stipulated that they provide details of the estimated total turnover for the year. Rule 9 of the APGST Rules, 1957 required every dealer, liable to get himself registered under Section 12 of the APGST Act, to submit to the assessing authority, within 30 days of the commencement of business, a return in Form-A showing his estimated total and net turnover for the first twelve months of his business. Form A required the dealer to furnish, among others, information, in the form of a statement, regarding the estimated total and net turnover of the business, the commodity-wise tax, and the turnover details. The said statement contains, in column 3 thereof, the estimated total turnover, in column 4 the estimated turnover on which exemption is claimed, and in column 5 the estimated net turnover. In the Circular dated 21.07.1997, the Commissioner of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer to submit Form A, and be heard to contend that the contents of the Form-D application submitted by them should be ignored, and no action should be taken to recover the arrears of tax due as Form A was not submitted by them. Accepting such a submission would require this Court to ignore the contents of Form-D submitted by the applicant-dealer, and restrain the respondents from collecting the tax arrears, admittedly due and payable by the assessee-dealer, on the specious plea that the respondents had failed to obtain Form-A from them. Such a contention has only to be noted to be rejected. A surety is considered a favoured debtor and his liability is strictissimi juris. (M.S. Anirudhan v. The Thomcos Bank Ltd. [AIR 1963 SC 746 = (1963) Supp 1 SCR 63]). A surety is bound to the letter of his engagement. Beyond the proper interpretation of that engagement, there can be no hold upon him. He receives no benefit and no consideration. He is bound, therefore, merely according to the proper meaning and effect of the written engagement that he has entered into. (Blest v. Brown [(1862) 4 De G.F. J. 365 = 45 E.R. 1225] ; M.S. Anirudhan9; State of Maharashtra v. Dr. M.N. Kaul [AIR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of surety furnished by him/her), the surety bond, in the present case, makes no reference to the estimated tax, and refers only to the petitioner having voluntarily agreed to pay the tax dues to the Government in case her son defaulted in payment. It is also evident from the counter affidavit filed by the respondents that Form A, allegedly filed by the dealer, is not available on record and, while furnishing all the other documents sought for by the petitioner, a copy of Form-A could not be furnished as no such Form-A appears to have been submitted by the dealer earlier. In any event, except for a self-serving assertion that Form A was filed, no material has been placed on record by the petitioner to show that Form A was filed, and the turnover estimated therein is different from the estimated total turnover referred to in the Form D application filed on behalf of the dealer. Dr. S.R.R. Viswanath, Learned Counsel for the petitioner, would submit that the security required to be furnished under Rule 28(8), not exceeding an amount equal to the tax payable under the Act for the year as estimated by the authority, is with reference to the estimated net turnover in Form A, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. Viswanath on R. Dandayudhapani2 is misplaced. In R. Dandayudhapani2, a Division Bench of this Court observed:- It is wholly unnecessary for this Court to examine the scope of Rule 28 (8) of the Rules for, even if the submission of Sri P.Balaji Verma, learned Special Standing Counsel for Commercial Taxes, were to merit acceptance, the registering authority was required to have estimated the amount of tax payable under the Act for a year; and to have called upon the petitioner to produce a surety for the said sum. Neither has any such exercise been undertaken by the registering authority nor has any material been produced before this Court to show that the petitioner was required to furnish a surety for the estimated sum. The surety bond dated 24.10.1994, placed before this Court, merely records the statement of the petitioner that he stood as surety for the tax due under the Act from the third respondent; and that their immovable property was worth ₹ 2,00,000/-. This surety bond cannot be construed as if the petitioner had undertaken to furnish surety for ₹ 2,00,000/-. While failure of the registering authority, to estimate the tax payable under the Act for a ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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