Cash security may count toward statutory deposit when rules allow adjustment and pending penalty proceedings are not shown.

Cash security lying with the department could be adjusted towards the deposit required for entertaining an application under section 30 of the U.P. Sales Tax Act, because section 29(1) and Rule 88 permit adjustment of refundable or payable amounts against dealer security. The short deposit objection also failed where the record did not show pending penalty proceedings under section 13-A; with the relevant records in the tax authorities' custody and the existence of such proceedings within their special knowledge, the dealer could not be faulted for the alleged deficit. The revision was accordingly rejected and the deposit treated as sufficient.

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Issues: (i) Whether cash security deposited at the check post could be adjusted towards the amount required to be deposited for entertaining an application under section 30 of the U.P. Sales Tax Act. (ii) Whether, in the absence of material showing pending penalty proceedings, the restoration application could be rejected for short deposit.

Issue (i): Whether cash security deposited at the check post could be adjusted towards the amount required to be deposited for entertaining an application under section 30 of the U.P. Sales Tax Act.

Analysis: Section 29(1) of the U.P. Sales Tax Act permits adjustment of refundable amounts against outstanding dues, and Rule 88 specifically provides that tax or other payable amounts may be adjusted from cash security furnished by a dealer. On this framework, cash security already lying with the department was capable of being treated as part of the required deposit.

Conclusion: The cash security could be adjusted towards the required deposit.

Issue (ii): Whether, in the absence of material showing pending penalty proceedings, the restoration application could be rejected for short deposit.

Analysis: There was nothing on record to show that penalty proceedings under section 13-A were subsisting when the application under section 30 was moved. The relevant records were in the custody of the sales tax authorities, and the existence of pending penalty proceedings was within their special knowledge. In the absence of such material, the shortfall could not be sustained against the dealer.

Conclusion: The restoration application could not be rejected on the ground of short deposit.

Final Conclusion: The revision failed, and the order treating the dealer's deposit as sufficient by including the cash security stood undisturbed.

Ratio Decidendi: Where the statute and rules permit adjustment of cash security towards tax liability, and the authority fails to show that penalty proceedings were pending, the security may be counted toward the deposit required for entertaining the dealer's application.

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