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2013 (1) TMI 273 - KERALA HIGH COURTKVAT Act - demand of additional security of ₹ 50,00,000/- - dealer obtained registration during the year 2011 furnishing security of ₹ 75,000/- - cancelling of registration on non submitting of security - Held that:- Section 17 of the KVAT Act is concerned, sub section (1) enables the registering authority to demand security from the dealer for an amount not exceeding one half of the tax payable for the year on the turnover of the dealer as estimated by him. Sub section (2) deals with the case of dealers effecting first sale of goods within the State, in whose case also, security of an amount not exceeding one half of the tax payable on the turn over as estimated by the registering authority can be demanded. Proviso states that the registering authority shall have the power to demand at any time additional security only in a case where he is satisfied that the turn over estimated by him under sub section (1) or (2) for the purpose of fixing one half of the tax payable for the year is too low. Once registration is granted accepting security as above, when turnover estimated based on which one half tax payable is fixed, is found to be too low, for making up the shortage of the one half of the tax payable as security, additional security can be demanded. As far as the provisions of the CST Act are concerned, here also, Section 7(3A) provides not only for furnishing of security but also additional security. However, maximum amount for which additional security can be demanded is prescribed in sub section (3BB) related to the turnover estimated by the registering authority. Therefore, under the CST Act also, additional security can be demanded only to make up shortage of security which is subject to the maximum limit prescribed in the Act - thus orders demanding additional security and registration cancelled is to be set aside.
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