Chapter III

19 Security in the interest of revenue

(1) Where it appears necessary to the registering authority so to do -

(a) for the proper realisation of any tax, penalty or other sums due or payable under this Act; or

(b) for the proper custody or use of forms prescribed under this Act or the rules framed thereunder; or

(c) as a condition for the grant or, as the case may be, the continuance in effect of registration certificate, it may, by an order in writing and for reasons to be recorded therein, direct, before the grant or as the case may be, at any time while such certificate is in force, that the dealer or the person concerned shall furnish, in the prescribed manner and within such time as may be specified in the order such security or, if dealer or person concerned has already furnished such security, additional security of any nature, as may be specified, for all or any of the aforesaid purposes:

Provided that a valid security or an additional valid security, furnished for any of the aforesaid purposes under the provisions of the erstwhile Act, shall also be deemed valid for such purpose under this Act, if the dealer informs his assessing authority or the registering authority, as the case may be, of his intention to continue in effect such security or additional security alongwith undertaking from the sureties on the stamp paper of proper face value and denomination.

(2) No dealer or the person concerned shall be required to furnish any security or additional security under sub-section (1) by the registering authority unless he has been given an opportunity of being heard, and the amount of such security or additional security that may be required to be furnished by any dealer shall also in no case exceed the tax payable, in accordance with the estimate of such authority on the turnover of the dealer for the assessment year in which such security is required to be furnished.

(3) Notwithstanding anything contained in sub-section (1) or sub-section

(2) the Commissioner may, in respect of any goods notified by the Government in this behalf, by a general order in writing, direct that a cash security of such amount as may be specified in such order shall be required to be furnished by a dealer or person requiring any of the forms prescribed under this Act.

(4) Where the security furnished by a dealer or person concerned under sub-section (1) is in the form of a surety bond and any surety dies or becomes insolvent, the dealer or the person concerned shall, within thirty days of the occurrence of any of the aforesaid events, inform the authority granting the certificate under section 17 or section 18 or the authority issuing the forms referred to in clause (b) of sub-section (1), as the case may be, and shall within sixty days of such occurrence furnish a fresh surety bond or furnish in the prescribed manner other security for the amount of the bond.

(5) The assessing authority may, by order and for good and sufficient cause, forfeit the whole or any part of the security furnished by a dealer or the person concerned -

(a) for realising any amount of tax, penalty or other amount payable by the dealer or the person concerned; or

(b) if any dealer or person concerned is found to have misused any of the forms referred to in sub-section (1) or to have failed to keep them in proper custody;

Provided that no order shall be passed under this sub-section without giving the dealer or the person concerned an opportunity of being heard.

(6) Where by reason of an order under sub-section (5) the security furnished by any dealer or the person concerned is rendered insufficient, he shall make up the deficiency in such manner and within such time as may be directed by the assessing authority.

(7) The registering authority may -

(a) refuse to grant registration certificate; or

(b) suspend any registration certificate already issued; or

(c) refuse to issue any of the forms referred to in sub- section (1) or sub-section (3), to any dealer or the person concerned, who has failed to comply with an order under sub-section (1) or sub-section (3), or with the provisions of sub-section (4) or sub-section (6), until the dealer or the person concerned has complied with such order or such provisions, as the case may be:

Provided that no order, under clause (a) or clause (b) above, shall be passed without giving the dealer or the person concerned an opportunity of being heard.

(8) The registering authority may, on application by the dealer or the person concerned, order the discharge of the surety or refund any amount or part thereof deposited by way of security by the dealer or the person concerned under this section or under any other section if it is not required for the purpose of this Act.

(9) An appeal under section 55 shall lie against an order passed under this section.

(10) Any person aggrieved by an order of the appellate authority may, within ninety days of the service of the order on him but after furnishing the security, file an appeal before the Tribunal under section 57.

(11) The provisions of this section shall mutatis mutandis, apply in relation to security required to be furnished under the order of any authority under this Act or the Court.