Recorded reasons for security demands must disclose a real basis; a laconic endorsement cannot sustain the notice.

A writ petition challenging a sales tax security demand was maintainable because the impugned notice was not a final assessment or a revisable order, so the alternative-remedy bar under the sales tax law and Article 226(3) did not apply. On the merits, the power to demand security under section 7(4a)(i) required good and sufficient reasons recorded in writing, and the recorded endorsement was too brief to disclose the real basis of satisfaction or to inform the dealer why security was sought. The notice was therefore quashed for inadequate reasons, though the authority was left free to proceed afresh in accordance with law.

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Issues: (i) Whether the writ petition was barred by the alternative remedy provisions under the sales tax law and Article 226(3) of the Constitution of India; (ii) whether the notice demanding security under section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941 was valid when the recorded reasons were brief and did not adequately disclose the basis for the demand.

Issue (i): Whether the writ petition was barred by the alternative remedy provisions under the sales tax law and Article 226(3) of the Constitution of India.

Analysis: The notice demanding security did not amount to a final assessment or a revisable order under section 20(3) and section 20(4) of the Bengal Finance (Sales Tax) Act, 1941. Since no efficacious statutory remedy was available against the impugned action, the constitutional bar on writ jurisdiction was not attracted.

Conclusion: The writ petition was maintainable and the preliminary objection failed.

Issue (ii): Whether the notice demanding security under section 7(4a)(i) of the Bengal Finance (Sales Tax) Act, 1941 was valid when the recorded reasons were brief and did not adequately disclose the basis for the demand.

Analysis: The power to demand security is intended as a safeguard for proper realisation of tax and may be exercised only for good and sufficient reasons recorded in writing. Although the authority had jurisdiction to act on relevant material and the demand was not shown to be excessive or arbitrary on the facts, the statutory requirement of recording reasons had an independent content. The endorsement on the file was too laconic to disclose the real basis of the satisfaction or to enable the dealer to know why security was demanded.

Conclusion: The impugned notice was invalid for want of proper reasons recorded in writing and could not be sustained.

Final Conclusion: The notice demanding security was quashed on the limited ground that the statutory requirement of recording adequate reasons was not satisfied, while the authority was left free to proceed afresh in accordance with law.

Ratio Decidendi: Where a statute empowers demand of security only for good and sufficient reasons to be recorded in writing, the recorded reasons must disclose a real and intelligible basis for the exercise of power; a mere formal or laconic endorsement is insufficient.

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