Dismissal of Petition Challenging Recovery Notice on Sales Tax Dues for Surety Liability

The Court dismissed the petition seeking to quash a recovery notice for sales tax dues from a surety, as the petitioner's liability extended beyond the expiration of the surety period. The Court held that the guarantor was responsible for dues before dissolution of the firm and up to six months after cancellation of the surety bond, emphasizing that notice of withdrawal did not absolve the petitioner of liability. Reference was made to a Supreme Court judgment stating that proceeding against the principal debtor before the guarantor was not required. Therefore, the recovery notice was upheld, and the petition was dismissed in C.W.P. No.3492 of 1992.

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Issues involved: Petition seeking quashing of recovery notice for sales tax dues from a surety.

Summary:
In C.W.P. No.3492 of 1992, the petitioner sought to quash a recovery notice issued by the Excise and Taxation Department for sales tax dues, as the petitioner had stood surety in case of default by the dealer. The petitioner argued that the recovery proceedings were illegal as the period of surety had expired, and notice of withdrawal was given. The State contended that unilateral withdrawal with retrospective effect was impermissible, and the liability being enforced related to the period before the surety expired. The Court noted that the recovery period was covered by the surety, and giving notice of withdrawal was not sufficient to absolve the petitioner of liability. Citing legal precedents, the Court held that the guarantor was liable for dues prior to dissolution of the firm and up to six months after cancellation of the surety bond. The Court also referenced a Supreme Court judgment stating that proceeding against the principal debtor before the guarantor was not necessary. Consequently, the Court dismissed the petition, finding no grounds to quash the recovery notice.

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