Quashing of security demands: general administrative directions cannot override quasi-judicial discretion or hearing requirements.

Security for tax realisation under the Central Sales Tax Act could be demanded only by the registering authority, on individual consideration, by written order for recorded reasons and after hearing the affected party; it could not be imposed mechanically through general administrative directions. The High Court held that the Commissioner had no jurisdiction to issue confidential instructions to check-post officers to demand and fix security for inter-State stock transfer goods, particularly where the transactions were not taxable under that Act. The impugned circulars and orders were therefore illegal and without jurisdiction, and the demand and collection of security based on them were quashed.

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Issues: Whether the Commissioner of Taxes could issue confidential administrative directions requiring check-post officers to demand and fix security for vehicles carrying goods on inter-State stock transfer, and whether such demand of security was lawful in the absence of tax liability and without individual consideration by the competent authority.

Analysis: Security under section 7(2-A) of the Central Sales Tax Act, 1956 applies at the stage of grant of registration, while section 7(3-A) permits additional security only where it appears necessary to the authority granting registration, by an order in writing for recorded reasons. Section 7(3-B) requires an opportunity of hearing before security or additional security is demanded. The power is therefore not routine or mechanical, but must be exercised on case-specific objective consideration and with reasons. The authority competent to exercise this power is the registering authority, not the Commissioner by way of general instructions. Demand of security is a quasi-judicial function and cannot be controlled by administrative directions. Since the goods in question moved on stock transfer basis and were not taxable under the Central Sales Tax Act, 1956, there was no basis for demanding security for proper realization of tax under that Act. The analogous provision in the Assam General Sales Tax Act, 1993 also did not justify such demand for inter-State transactions.

Conclusion: The impugned circulars and orders were without jurisdiction and illegal, and the demand and collection of security on the basis of those instructions could not be sustained.

Final Conclusion: The writ petition succeeded, the impugned instructions were quashed, and the respondents were restrained from demanding or collecting security at the check-posts on the basis of those directions.

Ratio Decidendi: A power to demand security for tax realisation that is vested in a registering authority must be exercised quasi-judicially on individual consideration, with recorded reasons and an opportunity of hearing, and cannot be overridden by general administrative directions, especially where no tax is payable on the transaction concerned.

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