Additional security under sales tax rules upheld where arrears and return defaults justified the authority's discretion.

Rule 29(7) of the Andhra Pradesh General Sales Tax Rules permits the registering authority to demand security from a registered dealer to safeguard payment of tax and surcharge within the prescribed limit. Where the dealer had failed to file returns, had tax arrears, and the record showed an average monthly tax liability of about Rs. 18,000, the authority was competent to seek additional security. The demand was treated as a proper exercise of the statutory discretion and not as arbitrary or improper, so the additional security deposit was upheld.

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Issues: Whether the registering authority had jurisdiction under Rule 29(7) of the Andhra Pradesh General Sales Tax Rules to demand additional security from a registered dealer and whether the demand of Rs. 18,000 was an arbitrary or improper exercise of that power.

Analysis: Rule 29(7) authorises the registering authority to require an applicant for registration or a registered dealer to deposit security for proper payment of tax and surcharge, subject to the prescribed limit. The dealer had defaulted in filing returns and had arrears of tax, and the record showed that the average monthly tax liability had been about Rs. 18,000. On those facts, the authority was competent to call for additional security, and the amount demanded could not be characterised as arbitrary or as an improper exercise of the discretion vested by the rule.

Conclusion: The demand for additional security deposit was valid and was not liable to be interfered with.

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