Recorded reasons required for security demands under sales tax law; arbitrary or routine exercise of power is invalid.

Security under section 6(7)(i) of the Rajasthan Sales Tax Act could be demanded only on recorded, objective reasons showing that it was necessary to ensure proper tax payment or to safeguard the custody and use of declaration forms. The HC found no material showing default, misuse of declaration forms, financial instability, or any other factual basis for the demand, and held that a vague reference to common knowledge and discretion was insufficient. The power had to be exercised on sound principles, not routinely or arbitrarily. The security demand was therefore illegal and unsustainable, and was set aside.

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Issues: Whether the demand for security under section 6(7)(i) of the Rajasthan Sales Tax Act, 1954 was sustainable when no valid reasons were recorded and no material showed necessity for ensuring proper payment of tax or preventing misuse of declaration forms.

Analysis: The statutory power to demand security is conditioned on the assessing authority forming the view, for recorded reasons, that security is necessary either to ensure proper payment of tax or to safeguard proper custody and use of declaration forms. The impugned orders did not disclose any instance of default in payment of tax, misuse of declaration forms, financial instability, or other factual basis justifying the demand. A bare reference to "common knowledge" and the supposed discretion of the authority was insufficient. Discretion under the provision had to be exercised on sound principles and not as a matter of routine or arbitrariness.

Conclusion: The security demand was illegal and unsustainable; it was set aside in favour of the petitioner.

Ratio Decidendi: A demand for security under section 6(7)(i) can be made only on recorded, objective reasons showing necessity for tax protection or prevention of misuse of declaration forms, and the power cannot be exercised arbitrarily or routinely.

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