Bank guarantee condition in tax stay orders may be replaced by personal bond where revenue is otherwise secured.

A bank guarantee condition imposed in stay orders for balance tax and penalty can be modified where the assessee has already made the required deposits and the statutory charge under the sales tax enactments sufficiently protects the revenue. The High Court accepted that a personal bond was an adequate substitute for the balance dues under the Tamil Nadu General Sales Tax Act, the Tamil Nadu Value Added Tax Act and the Central Sales Tax Act. The first condition in the stay orders was left undisturbed, but the bank guarantee requirement was replaced by a personal bond.

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Issues: Whether the condition requiring furnishing of bank guarantee for the balance tax and penalty should be substituted by a personal bond in view of the statutory charge created under the sales tax enactments.

Analysis: The writ petitions challenged only the second condition imposed in the stay orders. The Court noted that the petitioner had already deposited the amounts directed at the stage of appeal and stay, and relied on the statutory framework under Section 24(2) of the Tamil Nadu General Sales Tax Act, 1959, Section 42 of the Tamil Nadu Value Added Tax Act, 2006 and Section 9 of the Central Sales Tax Act, 1956. Following its earlier approach in similar matters, the Court accepted that the condition of furnishing bank guarantee could be modified and that a personal bond would sufficiently secure the revenue.

Conclusion: The requirement of bank guarantee was replaced by a direction to execute a personal bond for the balance tax and penalty, while the first condition was confirmed.

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