K M SALIM Vs. ADDITIONAL SALES TAX OFFICER

JUDGEMENT

(1.) THE petitioner is challenging exhibit P8 order wherein an application for registration under the KGST and CST Acts are rejected by the respondent. The petitioner is challenging the findings in exhibit P8. If the findings are true then of course there is no case for any interference at all. In the first place the officer has stated that the owner of the mill which is stated to have been taken on lease by the petitioner has informed him that he does not know the whereabouts of the petitioner. Further the sureties offered by the petitioner are people without any credibility. It is also stated that one of the sureties offered by the petitioner is already a surety for registration granted to another dealer who is a substantial defaulter. If that be so I do not know why the officer is not proceeding against the sureties for recovery of the arrears due from that dealer. Counsel for the petitioner submitted that the rejection of a surety is not a ground for declining registration and petitioner has offered another two sureties.

(2.) AS far as possible registration applied for under the KGST and CST Acts should be granted because if registration is not granted the same will encourage people to do business without registration and even then department is bound to recover the tax from dealers who are carrying on business without registration. Registration will serve better accountability than allowing business to be carried on by dealers without registration. However the assessing officer will be perfectly justified in demanding proper security for granting registration. The purpose of the security is to recover tax in the event of default and therefore the asset offered towards security should be capable of easy conversion into cash. It could be in the form of bank guarantee or landed property or any such other security acceptable to the department. Even where the party is not able to furnish big amount of security, the officer can keep on monitoring the business activities of the dealer including the monthly returns filed, payment of tax and statutory compliance so that for the first violation registration could be cancelled and recovery made. Therefore an application for registration should not be rejected on technical grounds and rejection should always be conditional so that the party on complying with the requirements of law suggested by the officer is granted registration. In the circumstances I direct the officer to consider exhibit P8 as a proposal for rejection of application for registration with simultaneous direction to the petitioner to produce proper lease deed for the business place and godown and offer security in the form of bank guarantee or landed property, with title deed and possession certificate issued by the Village Officer. Assessing officer will verify the lease deed, summon the building owner and ensure that there is proper lease and thereafter consider the same if necessary by conducting local enquiry and inspection and then to grant registration to the dealer. The writ petition is disposed of directing the officer to reconsider the matter if petitioner makes offer in terms of above observations. I make it clear that if petitioner does not offer credible people as sureties with sufficient assets available with them, it will be open to the officer to accept bank guarantee for reasonable amount and keep on monitoring the business by checking monthly returns and periodical inspection and survey so that liability do not get accumulated making recovery impossible. Final decision will be taken on the application for registration within one month from the date of the petitioner producing lease deed and security as stated above.