TMI Blog1992 (2) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... 41. That provision runs as follows: "The Commissioner may, for good or sufficient reasons to be recorded in writing,- (i) demand from any registered dealer or any person who has applied for registration under this Act, after giving such dealer or person an opportunity of being heard, reasonable security for the proper payment of tax payable by him under this Act." The undisputed facts are that the applicant, M.K. (Imports Exports) Pvt. Ltd., is a registered dealer under the said Act of 1941. The company received a show cause notice dated June 22, 1987, from the Assistant Commissioner of Commercial Taxes, respondent No. 1, directing it to show cause as to why a security of suitable amount under section 7(4a)(i) of the Act of 1941 sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 987. It is further stated that Madan Lal Kejriwal, one of the directors of the applicant-company, is the proprietor of M/s. United Commercial Company, in the same line of business as of the applicant. That proprietorship concern and the applicant-company carry on their business from the same address. Other directors of the applicant-company are closely related to Madan Lal. The record of payment of tax by United Commercial Company is very bad. There is no tenancy right of the applicant. The tenancy stands in the name of Santosh Devi Kejriwal, a director of the applicant and a close relative of Madan Lal. By stating these and other such facts, the respondents have sought to justify the demand of security for proper collection of revenue. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision reported in [1977] 39 STC 462 (Cal) (Surja Mohan Chakraborty v. State of West Bengal), [1980] 45 STC 128 (Raj) in the case of Delhi Cloth General Mills Co. Ltd. and another decision of the Calcutta High Court in the case of Bidhu Bhusan Deb reported in [1989] 73 STC 256; [1989] 22 STA 50. Mr. T.N. De, learned State Representative, has relied on a decision of the Supreme Court in the case of Nand Lal Raj Kishan [1961] 12 STC 324. This case was relied on to show that the quantum of security of Rs. 35,000 demanded in the instant case was commensurate with the tax liability of the applicant. According to Mr. De, the annual tax liability of the applicant comes to about Rs. 1,15,000. Therefore, the security of Rs. 35,000 is roughly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated August 1, 1987, was passed not on any of the grounds mentioned in the show cause notice. It was passed on the ground that other directors of the company are related to a director named Madan Lal Kejriwal, who is the proprietor of the United Commercial Company, which is a defaulter in submission of returns. This ground was clearly not mentioned in the show cause notice. Therefore, the applicants had no opportunity to meet this ground in the course of submitting its reply. That being so, whether or not the ground is extraneous, no reasonable opportunity was given to the applicant to make its submission and that makes the show cause notice invalid. Therefore, the impugned order dated August 1, 1987, was passed without affording the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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