Surety liability after final assessment survives when the confirmed tax demand remains secured by the guarantee undertaking.

A provisional assessment merges into the final assessment under the U.P. Value Added Tax Act, 2008, but that merger does not extinguish a demand later confirmed in the final order. Where the surety bond expressly secures the assessed liability, recovery may continue against the sureties in accordance with their undertaking. The Contract Act arguments failed because there was no variance in the surety contract, no composition with the principal debtor, and no liability beyond the guarantee terms. Recovery notice and citation against the sureties were therefore enforceable.

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Issues: Whether recovery proceedings initiated against sureties under a provisional assessment and interim stay security survive after passing of the final assessment order, where the final assessment confirms the earlier demand.

Analysis: The statutory scheme under the U.P. Value Added Tax Act, 2008 contemplates assessment for a tax period and for the assessment year, and Section 28(8) provides that a provisional assessment order merges in the assessment order passed under that section. On the facts, the final assessment did not negate the tax liability created by the provisional assessment, but confirmed it for the relevant period. The Court distinguished authorities stating only that the assessing authority is not bound by a provisional assessment while making the final assessment; those decisions do not mean that a demand already created and confirmed in the final assessment becomes unenforceable. The surety bond also obligated the sureties to answer the secured amount, and the subsequent dismissal of the appeal as infructuous did not discharge that undertaking. The provisions of the Contract Act, 1872 relied upon by the petitioners did not apply because there was no variance in the surety contract, no composition with the principal debtor, and no liability beyond the terms of the guarantee.

Conclusion: The recovery notice and citation against the sureties were held enforceable, and the writ petition was dismissed.

Ratio Decidendi: A provisional assessment merges into the final assessment, but where the final assessment confirms the demand and the surety bond continues to secure that liability, recovery may be enforced against the sureties in accordance with the terms of their undertaking.

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