IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC MONDAY, THE 3RD MARCH 2008 / 13TH PHALGUNA 1929 WP(C).No. 4413 of 2008(A) ------------------------- PETITIONER: -------------- BINOY VARGHESE, NJEZHUNGAL, CHELAMATTOM, OKKAL P.O., KOOVAPPADY, ERNAKULAM DISTRICT. BY ADV. SRI.BOBBY JOHN SRI.TOMSON T.EMMANUEL RESPONDENTS: ----------------- 1. THE COMMERCIAL TAX OFFICER, COMMERCIAL TAXES, KUNDARA. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ANTONY DOMINIC, J. =============== W.P.(C) NO. 4413 OF 2008 A ==================== Dated this the 3rd day of March, 2008 J U D G M E N T The challenge in this writ petition is against Ext.P4. By Ext.P4, the registration application submitted by the petitioner under the KVAT and CST Act was rejected for the reason that the petitioner did not furnish additional security of Rs.10 lakhs. According to the learned counsel for the petitioner, in the matter of furnishing security for registration, the issue is governed by Exts. P5 and P6 circulars. It is contended that in terms of Ext.P6 circular, his being a proprietory concern, the liability is only to give security deposit of Rs.15,000/-. Petitioner would contend that as against this requirement, he was called upon to furnish additional security of Rs.10 lakhs. He would argue that once registration is granted, additional security can be demanded once the security furnished is found to be insufficient. Therefore, it is argued that the demand for additional security and consequent rejection of his application for registration is illegal and arbitrary. WPC 4413/08 :2 : 2. Respondents have filed a statement. According to the respondents, on receipt of the application for registration from the petitioner, enquiry was conducted and that it was found out that certain manufacturers are taking benami/bogus registration from Commercial taxes offices in Thiruvananthapuram and Kollam Districts for obtaining Delivery notes for effecting interstate sales of Veneers, Plywood etc and that the manufacturers are doing this with the ulterior motive to evade central excise duty and CST. It is stated that on enquiry, the Department concluded that the petitioner is a benami of M/s Asha Trading of Alwaye and that the intention is to obtain registration and to evade tax. On this basis, the respondents seeks to justify for the security of Rs.10 lakhs demanded from the petitioner. They submit that at the time of Registration itself they are entitled to demand additional security 3. I have heard the counsel for the petitioner and also the learned Government pleader. WPC 4413/08 :3 : 4. In my view, in terms of Sec.17 of the KVAT Act and Ext.P6, the Department is entitled to ask for additional security if there is justifiable reasons. It is true that ordinarily in respect of proprietory concern, the security deposit provided for is of Rs.15,000/- But Ext.P6 itself provides that the registering authority may if it is convinced on enquiry that the security provided for is not sufficient to safeguard the interest of the revenue, with the sanction of its next higher authority, seek from the applicant in writing a higher amount as security. From this it is clear that the registering authority is entitled to ask for additional security provided on enquiry it is satisfied that such additional security is necessary. Hence the competence of the respondents to demand additional security cannot be questioned. 5. From the statement filed it is obvious that enquiry was conducted and that they were convinced that the circumstances justified demand for additional security. Ext.P4 itself shows that by notice dated 17/11/2007 , petitioner was directed to furnish WPC 4413/08 :4 : additional security and that the said requirement has not been complied with. If that be so, there is nothing illegal in Ext.P4 and Ext.P4 has to be upheld and I do so. Writ petition fails and is dismissed. ANTONY DOMINIC,JUDGE. Rp