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of <h1>Court upholds recovery notice, dismisses writ petition on sureties' discharge, emphasizes enforceability of surety bond.</h1> <h3>Smt. Divya Dubey And Another Versus State of UP. And Others</h3> Smt. Divya Dubey And Another Versus State of UP. And Others - TMI, [2013] 62 VST 204 (All) Issues Involved:1. Validity of the recovery notice and citation.2. Effect of final assessment order on provisional assessment order.3. Discharge of sureties upon final assessment order.4. Applicability of Sections 129, 133, and 135 of the Contract Act, 1872.Detailed Analysis:1. Validity of the Recovery Notice and Citation:The petitioners challenged the recovery notice dated 10th January 2012 and the consequent recovery citation dated 12th March 2012, arguing that these should be quashed as the sureties given by the petitioners stood discharged upon the final assessment order. The court rejected this argument, stating that the provisional assessment order merges with the final assessment order as per Section 28(8) of the U.P. Value Added Tax Act, 2008. Therefore, the liability under the provisional assessment order does not get discharged merely by the final assessment order.2. Effect of Final Assessment Order on Provisional Assessment Order:The petitioners contended that the provisional assessment order should be considered non est (null and void) after the final assessment order. The court, however, clarified that the provisional assessment order merges into the final assessment order, meaning it becomes part of the final assessment and is not automatically discharged. The court cited Section 28(8) of the U.P. Value Added Tax Act, 2008, which states that provisional assessment orders merge with the final assessment orders. Therefore, the liabilities created under the provisional assessment order continue unless explicitly discharged in the final assessment order.3. Discharge of Sureties Upon Final Assessment Order:The petitioners argued that the sureties they provided in context of the provisional assessment order should be discharged after the final assessment order. The court noted that the sureties were given to secure the amount under the provisional assessment order, and since the final assessment order confirmed the tax liability, the sureties remain enforceable. The court referenced the terms of the surety bond, which indicated that the sureties would remain liable even if the appeal became infructuous. Furthermore, the second appeal was dismissed as infructuous because the final assessment order was passed, confirming the provisional assessment.4. Applicability of Sections 129, 133, and 135 of the Contract Act, 1872:The petitioners invoked Sections 129, 133, and 135 of the Contract Act, 1872, arguing for the discharge of sureties. The court found these sections inapplicable:- Section 129 (Continuing Guarantee): The court held that the surety given by the petitioners was not a continuing guarantee but a specific one for the provisional assessment amount.- Section 133 (Discharge by Variance in Terms of Contract): The court found no variance in the terms of the contract that would discharge the surety.- Section 135 (Discharge when Creditor Compounds with, Gives Time to, or Agrees Not to Sue Principal Debtor): The court noted that there was no agreement to compound, give time, or not sue the principal debtor in this case.Conclusion:The court dismissed the writ petition, upholding the recovery notice and citation. The petitioners' arguments regarding the discharge of sureties and the effect of the final assessment order on the provisional assessment order were rejected. The court emphasized that the provisional assessment order merges into the final assessment order, and the sureties provided remain enforceable as per the terms of the surety bond and relevant legal provisions.
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