Court sets aside bank guarantee order for tax collection, ruling officer exceeded jurisdiction, directs acceptance of security bond.

The court set aside the orders demanding a bank guarantee as security for tax collection, ruling that the assessing officer exceeded jurisdiction by not allowing flexibility in choosing the form of security. The court directed acceptance of the security bond submitted by the petitioner, emphasizing adherence to specified rules and appellate authority directions on security requirements.

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Issues:
Seeking to quash Exts.P11 and P12 and direction to accept Ext.P10 security bond as sufficient compliance of Ext.P8 order.

Analysis:
The petitioner was granted a stay of tax collection for certain assessment years under the CST Act, subject to remitting specific amounts and providing adequate security. The petitioner submitted Form No. 6A within the specified time frame. However, the Commercial Tax Officer directed the petitioner to furnish security in the form of a bank guarantee or as stipulated in Form No.6 with a solvency certificate through Exts.P11 and P12. The petitioner contended that the appellate authority allowed security in any form under the Act and, therefore, the assessing authority could not demand a bank guarantee. Rule 85 of the Kerala Value Added Tax Rules, 2005, provides for the furnishing of security in various ways specified under Rule 19 (2) (e). The rule allows for security bonds in Form No.6A or personal property as security, as directed by the authority. The assessing officer's insistence on a bank guarantee was deemed improper as the appellate authority had granted flexibility in choosing the form of security.

The court, after considering the provisions of Rule 19 (2) (e) and the appellate authority's discretion in allowing different forms of security, concluded that the assessing officer exceeded jurisdiction by demanding a bank guarantee. The court set aside Exts.P11 and P12 orders and directed the first respondent to accept Ext.P10 as sufficient security, provided it meets the necessary requirements. This judgment highlights the importance of adhering to the specified rules and the appellate authority's directions regarding the form of security to be furnished by the petitioner.

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