Court quashes excessive security order under Central Sales Tax Act; security can't exceed tax payable.

The Court quashed the order requiring enhanced security under the Central Sales Tax Act, finding it exceeded the limit prescribed by section 7(3BB) and was based on local Act transactions rather than the Central Act. Emphasizing that security cannot exceed the tax payable under the Central Act, the Court ruled the order invalid, allowing the writ petition with no costs awarded.

---

---

Issues:
1. Challenge to the order requiring enhanced security under the Central Sales Tax Act.
2. Interpretation of provisions of section 7 of the Central Sales Tax Act regarding the quantum of security.
3. Discrepancy between the turnover mentioned in the order and the actual taxable turnover under the Central Sales Tax Act.
4. Validity of the order passed under section 7(3A) in relation to the limit prescribed by section 7(3BB).

Detailed Analysis:
The writ petition challenged an order dated 29th October, 1990, which required the petitioner, a dealer registered under both local and Central Acts since 1983, to provide enhanced security of Rs. 9 lakhs under section 7 of the Central Sales Tax Act. The petitioner contended that most of its sales were local and there was no basis for the enhanced security. The Sales Tax Officer justified the enhanced security based on alleged tax evasion and a calculated liability, leading to the demand for additional security. The petitioner argued that the order exceeded the limit prescribed by section 7(3BB) of the Act, which determines the maximum security based on the tax payable. The Court noted discrepancies in the turnover referenced in the order and the actual taxable turnover under the Central Act, emphasizing that the order was based on local Act transactions. The Court highlighted that the order was passed under the Central Act, although the facts pertained to the local Act, rendering it contrary to the statutory provisions.

The Court delved into the interpretation of section 7(3BB) of the Central Sales Tax Act, emphasizing that the security a dealer may be required to furnish cannot exceed the tax payable under the Act based on the authority's estimate of the dealer's turnover. The Court stressed that the determination of security must be in accordance with the tax payable under the Central Sales Tax Act, as indicated by the use of "this Act" in the provision. The Court noted that the estimate of turnover mentioned in the impugned order was for local sales under the local Act, not the Central Act, highlighting the discrepancy in applying the provisions. The Court rejected the respondent's argument that they were entitled to charge and increase security under section 7(3A), asserting that the order must align with the limit set by section 7(3BB. The Court ultimately quashed the impugned order as it contravened the provisions of section 7(3BB), allowing the writ petition and making no order as to costs.

---