Mandatory reasons and hearing before demanding additional security make registration cancellation invalid when those safeguards are ignored.

Cancellation of a dealer's registration for failure to furnish additional security was unsustainable where the demand was issued without recorded reasons and without granting the mandatory opportunity of hearing under section 8-C. Section 8-C(2) requires an order in writing with reasons recorded before security or additional security can be demanded, and section 8-C(3) bars such demand unless the dealer has been heard. As the notice disclosed no reasons and the objections were not dealt with by any communicated order before cancellation, the registration was quashed and the writ petition was allowed.

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Issues: Whether cancellation of the dealer's registration under the U.P. Trade Tax Act, 1948 and the Central Sales Tax Act, 1956 for failure to furnish additional security was valid when the demand for security was made without recorded reasons and without complying with the opportunity of hearing required by section 8-C.

Analysis: Section 8-C(2) empowers the assessing authority to require security or additional security only by an order in writing and for reasons recorded therein, while section 8-C(3) mandates that no dealer shall be required to furnish such security unless an opportunity of being heard has been given. The notice demanding additional security did not disclose reasons, and the record did not show that the petitioner's objections had been dealt with by any communicated order before the registration was cancelled. In these circumstances, the cancellation was made without following the statutory procedure and could not stand.

Conclusion: The cancellation of registration was invalid and was quashed. The finding was in favour of the assessee.

Final Conclusion: The writ petition was allowed because the assessing authority failed to comply with the mandatory requirements governing demand of additional security and the consequential cancellation of registration.

Ratio Decidendi: Where a statute requires recorded reasons and a prior opportunity of hearing before security or additional security is demanded, cancellation of registration for non-compliance is unsustainable unless those procedural safeguards are duly observed.

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