3[(1) The Commissioner may, if it appears to him to be necessary so to do, for the
continuance of the certificate of registration, or for the proper realisation of tax,
composition money or other dues payable under this Act or as a condition of
registering a person as a dealer or as a condition of making a refund under section 38
of this Act, 1[or as a condition of de-sealing or release under sub-section (4) of
section 60,] require a person or prescribed class of persons to furnish security for the
proper performance of their responsibilities under this Act or under the Central Sales
Tax Act, 1956 (74 of 1956) in the prescribed amount, in the prescribed manner and
within such time as may be prescribed.]
(2) Notwithstanding sub-section (1) of this section, the Commissioner may increase,
vary, reduce or waive the prescribed amount of the security, having regard to –
(a) the nature and size of the business activities of the person;
(b) the amount of any tax, interest or penalty for which the person may be or
is likely to become liable at any time under this Act;
(c) the creditworthiness of the person;
(d) the nature of the security; and
(e) any other matter which the Commissioner considers relevant.
(3) Where the security or additional security furnished by a person is in the form
of a surety bond and the surety dies or becomes insolvent, the person shall within one
month of the occurrence of such event, inform the Commissioner and shall within
three months of such occurrence, execute a fresh surety bond.
(4) Where the surety bond has been executed by another registered dealer and
the dealer’s registration is either cancelled or he has closed down his business, the
person shall furnish a fresh security as may be prescribed and in the manner as stated
in sub-section (3) of this section.
(5) The Commissioner may, for good and sufficient cause, order the forfeiture
of the whole or any part of the security furnished by a person.
(6) Where the security furnished by any person is forfeited in whole or is
rendered insufficient, he shall furnish a fresh security of the requisite amount or, as
the case may be, shall make up the deficiency in such manner and within such period
as may be specified.
