Security bond liability under sales tax rules is governed by the bond, not the dealer's security ceiling.

A surety executing a security bond under Rule 6 of the Kerala General Sales Tax Rules, 1963 cannot restrict liability to one-half of the dealer's estimated tax or to the amount stated in the assessment of security under Rule 6(1). The assessing authority's estimate under Rule 6(1) binds the dealer, not the surety, because the surety is not a party to that determination. A bond under Rule 6(2)(e) creates an independent obligation, and under Rule 6(3) the security remains enforceable while registration continues and may be recovered on the dealer's default. The HC therefore upheld rejection of the writ appeal.

---

---

Issues: Whether a surety who executed a security bond under Rule 6 of the Kerala General Sales Tax Rules, 1963 could limit liability to one-half of the dealer's estimated tax or the amount assured in the bond, and resist recovery beyond that limit.

Analysis: Rule 6(1) concerns the assessing authority's power to require security from the dealer and to estimate the amount of security payable by the dealer. The surety is not a party to that determination. A bond executed under Rule 6(2)(e) creates an independent obligation, and under Rule 6(3) the security continues so long as the registration remains in force and is enforceable on default by the dealer. The surety therefore cannot challenge the correctness of the demand fixed under Rule 6(1) when recovery is pursued against him.

Conclusion: The surety's liability is governed by the bond and not by the ceiling in Rule 6(1); the writ appeal was rightly rejected.

---