Point of Law: Registration is done to commence the business under the provisions of the TNGST Act and such a registration under the TNGST Act itself is a statutory registration.

JUDGMENT :-

(Prayer: Writ Petition is filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus, calling for the records on the files of the respondent herein in ROC/Ref.3205/98-A3 in Form No.5, Form No.7 and Form No.7A dated 31.05.2002 under the Tamil Nadu Revenue Recovery Act, 1864, read with Section 29 of the Tamil Nadu General Sales Tax Act, 1959 and to quash the same and direct the respondent herein to raise the encumbrance created by way of Intimation in Nk.3205/98/A3, dated 12.12.2007.)

The order passed by the respondent in ROC/Ref.3205/98-A3 in Form No.5, Form No.7 and Form No.7A dated 31.05.2002 under the Tamil Nadu Revenue Recovery Act, 1864 read with Section 29 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as “TNGST Act” in short), is sought to be quashed and a direction is sought for to raise the encumbrance created by way of Intimation in Nk.3205/98/A3, dated 12.12.2007.

2. The petitioner states that her husband Mr.V.Kadhirvel filed an application for registration on 27.08.1992 under Section 21 of the Act, as a Proprietor concern for carrying on the business of buying and selling cotton waste in the name of Sri Angalamman Traders.

3. As per Section 21(1-A) of the TNGST Act, 1959, the respondent directed to furnish security, which shall not exceed one and half of the tax payable on the estimated taxable turnover disclosed in the application for registration, which is only Rs.2,500/-. Accordingly, the petitioner executed a security bond on 02.09.1992 in Form XIX B, by furnishing her properties in Singanallur as a security towards the sum due by the firm, whenever occurs.

4. It is admitted that the petitioner was not a partner of the firm and not participated in the business conducted by the Proprietor Mr.V.Kadhirvel. It is contended that she purchased the property, which was given by way of security from her own savings and the same was not inherited from any other person, including Mr.V.Kadhirvel.

5. It is further contended that the security bond was executed only on a contractual basis. As per Explanation I to Rule 24(15-A) of the Tamil Nadu General Sales Tax Rules, the said property was not registered by way of a registered mortgage of the property of land as security as per Section 58 of the Transfer of Property Act, 1882. Thus, the security given cannot be subjected to revenue recovery under the provisions of the Revenue Recovery Act.

6. Learned counsel appearing on behalf of the petitioner mainly contended that under the Indian Contract Act, a 'contract of guarantee' is a contract to perform the promise and in the case on hand, admittedly, security bond was executed by the petitioner. However, such execution of security bond is for a limited purpose and not in respect of the entire property and it is in respect of registration. Therefore, as per the Statute, now the respondent has no authority to bring the entire property for auction sale by invoking the provisions of the Revenue Recovery Act.

7. In support of the said contention, the learned counsel appearing on behalf of the petitioner, solicited the attention of this Court with reference to Section 24(2) of the TNGST Act and by relying on the said provision, the learned counsel submits that it is to be read along with Rule 24(15-A) of the Tamil Nadu General Sales Tax Rules, the registration of mortgage property, which is given by way of security as mandatory.

8. In the present case on hand, admittedly, there was no mortgage of property registered and therefore, the actions initiated against the entire property belongs to the petitioner is void ab initio.

9. Learned counsel appearing on behalf of the respondent disputed the contentions by stating that, while registering the business by Mr.V.Kadhirvel, the petitioner executed a security bond. The nature of security is well enumerated in the security bond itself. The security bond was executed in clear terms, so as to recover the entire d