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2016 (8) TMI 2 - HC - VAT and Sales TaxValidity of seeking Furnishing of security for an amount of ₹ 70 lakhs as a condition for registration - Section 17(2) of the KVAT Act - Held that:- there cannot be any dispute regarding the power of the officer in calling upon a dealer to furnish security not exceeding ˝ of the tax payable on the turnover of the dealer for the year as estimated by the Registering Authority. In cases where a new dealer seeks for registration, the Registering Authority is under obligation to estimate regarding the turnover of the dealer which apparently has to be based on certain factual material to be produced by the dealer. In fact it seems from Ext.P3 that, in the absence of any such material, the officer had proceeded to make the estimate on the basis of the turnover of M/s.Khushi International, the other firm. Primarily I do not find any error in the view taken by the Registering Authority, though it might be contended that the amount claimed is exorbitant. However, since the petitioner had relied upon Ext.P7 the return filed by M/s.Khushi International, the tax liability can be easily found out from the said document itself and the Registering Authority has to consider the same before taking a final decision in the matter. I am of the view that Ext.P7 may have relevance while conducting an enquiry in terms of Section 17 (2) of the Act. For that purpose, it will be appropriate for the Registering Authority to consider Ext.P7 as well before arriving at a finding regarding calling upon the petitioner to remit ₹ 70 lakhs. Matter restored before the authority to decide the issue afresh.
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