PAWAN KUMAR GUPTA Vs. STATE OF HARYANA

JUDGEMENT

(1.) This is a petition, under articles 226 and 227 of the Constitution, for quashing the notices issued by the Excise and Taxation Officer to the petitioner to deposit, as surety, the arrears of the sales tax payable by respondent No. 4, M/s. Jai Laxmi Rice Mills, Ambala City.

(2.) The petitioner is running his own business in Haryana as proprietor of M/s. Kishori Lal Pawan Kumar at Old Anaj Mandi, Ambala City. The petitioner stood surety for the firm M/s. Jai Laxmi Rice Mills, which consisted of three partners, Gulshan Kumar and his two sons, Dhanender Kumar and Narinder Kumar. The petitioner executed a surety bond in form ST-50 on September 21, 1987 standing as surety for the said firm in the sum of Rs. 50,000 for securing the payment of sales tax by the firm under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. One of the conditions in the bond was that the bond could be terminated by giving six months' notice in writing to the Assessing Authority. Two partners, namely, Dhanender Kumar and Narinder Kumar of M/s. Jai Laxmi Rice Mills, retired on April 1, 1993. Gulshan Kumar, thereafter, became the sole proprietor of the business. Gulshan Kumar informed the Excise and Taxation Officer, Ambala City, on April 27, 1993 about the change in the constitution of the firm. The Excise and Taxation Officer asked Gulshan Kumar, on June 22, 1996, to furnish fresh surety bond. Gulshan Kumar had earlier filed, on July 31, 1995, an application before the Excise and Taxation Officer for cancellation of the registration certificate issued to M/s. Jai Laxmi Rice Mills. The petitioner also filed an application before the Excise and Taxation Officer on September 20, 1995 for the withdrawal of his surety bond executed by him in favour of M/s. Jai Laxmi Rice Mills.

(3.) The petitioner has challenged the steps taken by the Excise and Taxation Officer against him for the purposes of recovery of the arrears of tax. The petitioner's case is that he is no more liable under the surety bond to discharge the tax liability on behalf of M/s. Jai Laxmi Rice Mills. He has already informed the Excise and Taxation Officer seeking the withdrawal of the surety bond and his liability has ceased after the expiry of six months from the date of the withdrawal. Thus, his liability under the surety bond came to an end after March 19, 1996. The Excise and Taxation Officer wrongly issued a recovery notice to the petitioner on August 21, 1996, asking the latter to discharge the tax liability of the firm. Since the petitioner's liability as a surety has ceased after March 19, 1996, the action taken by the Excise and Taxation Officer against the petitioner is said to be in contravention of the conditions of the surety bond.