Surety liability under sales tax registration security is limited to tax on the estimated turnover declared at registration.

Registration security furnished under Rule 28(8) is confined to the tax payable on the estimated turnover stated in the registration documents, and cannot be enlarged by a later best-judgment assessment. The surety bond is to be construed strictly, but it still secures the dealer's tax dues only within the contractual and statutory limit reflected in Form D. On the facts recorded, no reliable revised estimate was shown, so the surety's exposure was limited to the tax attributable to the declared turnover. Recovery against the surety was therefore sustainable only up to that limit, with the balance remaining recoverable from the dealer and other liable persons.

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Issues: Whether the surety's liability under the registration documents and Rule 28(8) of the Andhra Pradesh General Sales Tax Rules, 1957 was confined to the tax payable for one year as estimated by the dealer, and whether the impugned demand could validly exceed that limit.

Analysis: The security requirement under Section 12 of the Andhra Pradesh General Sales Tax Act, 1957 and Rule 28(8) of the Andhra Pradesh General Sales Tax Rules, 1957 operates independently of the separate security deposit guidelines in the Commissioner's circular. Form D required disclosure of the estimated total turnover for the year, and the record did not establish that a reliable Form A showing a different estimate had been filed. The surety bond had to be construed strictly, but on its terms it secured payment of the tax dues if the dealer defaulted. The Court held that the relevant benchmark was the tax payable on the estimated total turnover stated in Form D, not the larger assessed liability determined later on best judgment. Applying the declared turnover of Rs. 20,00,000/- and the prevailing tax rate of 4%, the surety's exposure was confined to Rs. 80,000/-.

Conclusion: The demand was unsustainable to the extent it exceeded Rs. 80,000/-, and recovery from the surety was upheld only up to that limit.

Final Conclusion: The writ petition succeeded in part by restricting the surety's liability to the tax attributable to the estimated turnover declared at the time of registration, while leaving the balance tax arrears recoverable from the dealer and other liable persons in accordance with law.

Ratio Decidendi: Where registration security is furnished under Rule 28(8) of the Andhra Pradesh General Sales Tax Rules, 1957, the surety's liability is confined to the tax payable for the year as estimated in the registration documents and cannot be extended beyond that contractual and statutory limit.

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