J.K. Iron and Steel Manufacturing Company vs D.C.T.O. (Addl.), Harbour II, Assessment Circle, Madras and Another

Bakthavatsalam, J.—The petitioner challenges rule 31 of the Tamil Nadu General Sales Tax Rules, 1959. Rule 31 provides for the furnishing

of security and it is in the following terms :

31(1). Where it is provided in the Act that an appellant (or an applicant in revision proceedings) shall furnish security in regard to the payment of

tax, or fee or other amount, the appellant (or applicant) or any person on his behalf shall furnish personal or property security, along with a security

bond in form XIX or a bank guarantee in form XIX-C as the authority before which the appeal or application is preferred may, in its discretion,

direct. Where an appellant or an applicant in revision proceedings or any person on his behalf, furnishes immovable property as security, he may in

any town to which sub-section (f) of section 58 of the Transfer of Property Act, 1882 (Central Act IV of 1882), is applicable, mortgage such

property to the Government by deposit of title deeds. The security bond or the bank guarantee, as the case may be, shall be filed in duplicate, the

original of which shall bear appropriate adhesive non-judicial stamps or court-fee stamps. In case the appeal or revision is fully allowed or

remanded in favour of the appellant/applicant, the security bond or the bank guarantee as the case may be, shall be void and of no effect.

Otherwise, it shall remain in full force and effect until the expiry of three months from the date of receipt of the appellate or revisional order by the

appellant/applicant. The security bond shall thereafter be released by necessary endorsement on the original and returned to the

appellant/applicant. The bank guarantee furnished shall become part and parcel of the records of the assessing and appellate or revisional authority

and shall not be returned to the bankers or the appellant or applicant. It shall be cancelled and an advice of cancellation sent to the

appellant/applicant/bankers after the expiry of three months from the date of receipt of the appellate or revision order by the appellant/applicant. If

a security bond had been furnished, it shall be released by necessary endorsement on the original and returned to the appellant/applicant and if a

bank guarantee had been furnished, it shall be cancelled and an advice of cancellation sent to the appellant/applicant/bankers, on request by the

appellant after the disposal of the appeal or earlier, if sufficient proof is produced that the entire amount for which stay has been granted is fully

paid.

A reading of the rule clearly shows that the assessee is to furnish security in regard to the payment of tax or fee or other amount along with a

security bond in form XIX as the authority before which the appeal or application is preferred may, in its discretion, direct. The rule does not say

that it should be to the satisfaction of the assessing authority. He has to file a security bond or furnish bank guarantee or other security to the

appellate authority. As such the contention raised by the petitioner is wholly misconceived. Section 31(5) of the Tamil Nadu General Sales Tax

Act, 1959, clearly shows that the security is to the satisfaction of the appellate authority, and not to the assessing authority. As such I am unable to

find any substance in the contention raised by the petitioner.

I am told that an appeal and a stay application have been preferred before the appellate authority, in this case, the second respondent herein. As

such, the second respondent is directed to dispose of the stay application according to law within four weeks from today (21st December, 1989).

Till then there will be a stay of collection of the disputed tax from the petitioner as per the assessment order in question. With this direction, this writ

petition is dismissed.

Writ petition dismissed.