Estimated turnover security demands must rest on relevant material; later return data must be considered before fixing quantum.

Section 17(2) of the Kerala Value Added Tax Act permits the registering authority to demand security at the time of registration on an estimated turnover, but the estimate must be based on relevant factual material. A security demand founded only on the turnover of another concern was vulnerable where the dealer produced subsequent return material bearing on the tax liability. That additional material had to be considered before fixing the quantum of security, and the demand was therefore premature and set aside for reconsideration.

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Issues: Whether the demand for security under Section 17(2) of the Kerala Value Added Tax Act, based on an estimated turnover, was sustainable.

Analysis: The registering authority has power under Section 17(2) to demand security at the time of registration on the basis of an estimated turnover. However, the estimate must rest on relevant factual material. Where the authority relied on the turnover of another concern and the petitioner produced subsequent return material showing the tax liability, that material had to be considered before a final decision on the quantum of security. The impugned demand was therefore premature.

Conclusion: The impugned security demand could not stand as issued and was set aside for reconsideration by the registering authority after taking the additional material into account.

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