Bank guarantee security pending appeal cannot be rejected merely because the issuing bank is outside Tamil Nadu.

A bank guarantee furnished in Form XIX-C as security pending appeal could not be rejected merely because the issuing bank was outside Tamil Nadu or not nationalised. Rule 31 governed security for payment of tax, loss fee or other amount pending appeal or review, and neither that rule nor Form XIX-C required the bank to be located in Tamil Nadu. Rule 24(15-A), which concerns security for obtaining a registration certificate, was not applicable to security pending appeal. The guarantee ought to have been accepted.

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Issues: Whether a bank guarantee furnished in Form XIX-C for security pending appeal could be rejected merely because the issuing bank was situated outside Tamil Nadu and was not a nationalised bank.

Analysis: The applicable provision was Rule 31, which governs security for payment of tax, loss fee, or other amount pending appeal or review, and permits a bank guarantee in Form XIX-C. Neither Rule 31 nor Form XIX-C imposed any requirement that the bank issuing the guarantee be situated in Tamil Nadu. Rule 24(15-A), dealing with security for obtaining a registration certificate, was not the governing provision for security pending appeal.

Conclusion: The bank guarantee could not be rejected on the ground that the issuing bank was outside Tamil Nadu, and it ought to have been accepted.

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