Mandatory hearing before additional security demand invalidates consequential cancellation proceedings under sales tax law.

Section 21(2-C) of the Tamil Nadu General Sales Tax Act, 1959 requires that a dealer be given an opportunity of being heard before an order is made directing additional security under section 21(2-B). Because no such hearing was given, the statutory safeguard was violated and the demand for additional security could not be sustained. The consequential cancellation proceedings, being founded on that invalid demand, were also quashed.

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Issues: Whether the demand for additional security and the consequential cancellation proceedings were valid despite the dealer not being given an opportunity of being heard before being required to furnish additional security.

Analysis: Section 21(2-C) of the Tamil Nadu General Sales Tax Act, 1959 requires that the dealer be afforded an opportunity of being heard before an order is made calling upon him to furnish additional security under section 21(2-B). The record showed that no such opportunity had been given before the demand was made. Since the statutory safeguard was mandatory, the proceedings founded on the demand could not be sustained.

Conclusion: The challenge succeeded. The demand for additional security and the consequential order were quashed.

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