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: WP(C).No. 34038 of 2007(B) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : TRUE COPY OF THE BOND DT. 23.8.93 IN FORM NO.6 UNDER RULE 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 THE SECOND RESPONDENT EXT.P2(a) : TRUE COPY OF THE NOTICE NO. B4 13997/05 DT 23.8.2007 OF THE SECOND RESPONDENT UNDER SECTION34 R.R ACT EXT.P3 : TRUE COPY OF THE NOTICE NO. B4 13998/05 DT 23.8.2007 OF THE SECOND RESPONDENT EXT.P3(a) : TRUE COPY OF THE NOTICE NO. B4 13998/05 DT 23.8.2007 OF THE SECOND RESPONDENTUNDER SECTION 34 RR ACT EXT.P4 : TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 5.9.2005 OF THE SECOND RESPONDENT EXT.P4(a) : TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 5.9.2005 OF THE SECOND RESPONDENT UNDER SECTION 34 RR ACT EXT.P5 : TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 23.8.2007 OF THE SECOND RESPONDENT EXT.P5(a) : TRUE COPY OF THE NOTICE NO. B4 6928/05 DT 23.8.2007 OF THE SECOND RESPONDENT UNDER SECTION 34 RR ACT RESPONDENTS' ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE jma K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 34038 OF 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 6th day of December, 2011 J U D G M E N T The petitioners who were sureties of an assessee under the KGST Act challenges Exts.P2 to P5 recovery steps taken for recovery of tax dues of the original assessee. The petitioner's contend that on the basis of Ext.P1 bond executed in favour of the department, the department is entitled to recover only an amount of Rs.3 lakhs for which the assessee has executed bond and the petitioners herein have stood as sureties to the said bond. The petitioner's counsel with specific reference to Ext.P1 would say that the amounts for which the petitioners stood as surety is only Rs.3lakhs and the petitioners jointly and severally are liable only to that extent and 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 the furnishing of a bond by any assessee with two solvent sureties; if the Assessing Officer is of the opinion that such bond with sureties is to be furnished. Rule 6(1) also empowers the WPC.34038/2007 : 2 : assessing authority to specify an amount for the bond which as per the Rule should be not exceeding one-half of the tax payable on the turn over of the dealer for the year as estimated by the Assessing Officer or three months compounded amount, in the case of dealers who have opted to pay tax under section 7. Obviously, the amounts specified in the bond is not the same for all the dealers and it is the assessing officer's estimate of the probable tax payable that is the basis of fixing such amounts. The Assessing Officer also is entitled to call for security of further amounts in the form of bonds, specifying any larger amount, if in the course of assessment proceedings or otherwise he is of the opinion that the dealers taxable turnover is increasing. In the instant case the specification of Rs.3 lakhs necessarily is made by the Assessing Officer and the sureties are liable only to the extent specified in Ext.P1 bond. The petitioners' contention regarding their limited liability to the extent of the bond has to be accepted. The petitioners' counsel also points out the decision reported in Thomas and another v. Agricultural Income Tax and Sales Tax Officer (128 STC 224) to WPC.34038/2007 : 3 : further buttress the contention that the sureties are only liable to the amount specified under the bond. In the circumstances, I allow the writ petition with no order as to costs. The petitioner's counsel submits that the conditional interim order for the payment of Rs.3 lakhs has been complied with by the petitioner and the same is admitted by the Government. Hence, no recovery steps can be initiated against the petitioner as demanded in Exts.P2 to P5 and same shall stand set aside. Needless to say the bond executed by the petitioners as surety will stand discharged. Sd/- (K. VINOD CHANDRAN, JUDGE) jma //True copy// P.A to Judge