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2018 (11) TMI 716 - HC - VAT and Sales TaxSurety Bond - VAT registration - Effect of Withdrawal of sureties - discharge from liability of being surety - Rule 19(4) of the Kerala Value Added Tax Rules, 2005 - Held that:- Rule 19(2)(d) mandates that the bond should be in Form No.6 and that two sureties should sign it. If only one surety withdraws, then the bond remains with a single surety, though the Rule mandates it should contain two sureties. As seen from sub-rule (4), it does not provide for substitution of sureties. It only provides for the substitution of the bond, as one of many alternatives - In this case, the first bond has become unenforceable. If the Department's plea is to be accepted-that is, the second bond is to meet the additional demand on the dealer-then sub-rule (4) of Rule 19 remains unanswered. Even otherwise, Section 133 of the Contract Act may also come in the way of the Department’s defence. Without the surety’s consent, if the principal debtor and the creditor vary the contractual terms, then, that variation discharges the surety from the transaction and the liability. Viewed from either perspective, the Department's contention cannot be accepted. It must fail - petition allowed.
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