Registration security is limited to the estimated one-year tax liability and cannot be treated as open-ended surety coverage.

Security furnished at registration under the Andhra Pradesh General Sales Tax framework is linked to the tax payable for one year as estimated at the time of registration. On that construction, a surety bond given for an assessee cannot be treated as open-ended security extending beyond the period for which it was furnished. The Court followed its earlier view on the same question and rejected recovery based on a wider interpretation of the security instrument. Recovery orders against the sureties were therefore held unsustainable and were quashed.

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Issues: Whether recovery proceedings against sureties were justified when the security furnished at the time of registration was intended to cover tax liability only for a year as estimated by the dealer.

Analysis: Section 12(7) of the Andhra Pradesh General Sales Tax Act, 1957, Rule 28(8) of the Andhra Pradesh General Sales Tax Rules, 1957, and clause 19 of Form D indicate that the security required for registration is linked to the tax payable for one year, as estimated at the time of registration. On that construction, a surety furnished by a person on behalf of an assessee cannot be treated as an open-ended security extending to years beyond the period for which it was given. The Court followed its earlier view on the same question and held that recoveries founded on such an extended interpretation were not sustainable.

Conclusion: The recovery orders against the sureties were unjustified and were quashed.

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