DHANALAKSHMI TRADERS Vs. COMMERCIAL TAX OFFICER FAC

JUDGEMENT

(1.) BY the impugned notice dated January 29, 1996, the petitioner who is holding registration certificate under the Tamil Nadu General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956 from 1975 onwards, has been called upon to pay a sum of Rs. 1,50,000 as security deposit in any nationalised bank in order to prove the Genuineness of his business transactions failing which it is threatened that the registration certificate will be cancelled.

(2.) SECTION 21(2 -B) and (2 -C) reads as follows : - -

(3.) IN the instant case before threatening the cancellation of registration with direction to pay a sum of Rs. 1,50,000 in cash by depositing in a nationalised bank, the Commercial Tax Officer (FAC), Sankarankoil, has not applied his mind to the above provisions of the Act and Rules. He has arbitrarily demanded a huge sum on the ground "to prove the genuineness of your business" which is not statutorily recognized ground for demanding security deposit. The security should be deposited only for securing proper realisation of the tax payable on the turnover of a dealer. The arbitrary demand made in the impugned notice dated January 29, 1996 is therefore set aside.