Security demand notices under sales tax law must state reasons and material grounds; bare statutory wording breaches natural justice.

A notice demanding security or additional security under sales tax enactments must disclose the reasons, grounds, and material facts on which the authority is prima facie satisfied that such demand is necessary. A bare reproduction of the statutory language is insufficient because it prevents the assessee from making an effective representation and breaches natural justice. Later disclosure of reasons does not cure the defect. Notices issued without meaningful disclosure are bad in law, and any consequential orders based on them are unsustainable; fresh notices may be issued in accordance with law.

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Issues: Whether notices demanding security or additional security under the sales tax enactments were invalid for not disclosing the reasons and material grounds on which the authority was prima facie satisfied that such security was necessary, and whether orders passed on the basis of such notices were vitiated for breach of natural justice.

Analysis: The relevant provisions did not make furnishing of security mandatory in every case. The authority could require security or additional security only when, on relevant materials and after applying its mind to the facts of the individual assessee, it was prima facie satisfied that such demand was necessary for proper realisation of tax or proper custody and use of forms. A notice that merely repeated the statutory language without stating the reasons, grounds, and material facts did not enable the assessee to make an effective representation. Disclosure of reasons only at a later stage could not cure the denial of a meaningful opportunity to show cause. The earlier decisions relied on by the petitioners were held directly applicable, and the notices were found to suffer from the same defect of non-disclosure.

Conclusion: The notices were held to be bad in law for violation of the principles of natural justice, and the consequential orders passed on their basis were also unsustainable.

Final Conclusion: The common challenge succeeded, and the impugned notices and consequential orders were quashed while leaving liberty to issue fresh notices in accordance with law.

Ratio Decidendi: Where a statute permits demand of security only upon the authority being satisfied on relevant materials, the notice must disclose the reasons and material grounds forming that satisfaction so that the assessee may effectively respond; failure to do so violates natural justice and invalidates the consequential action.

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