Additional security for tax dues must rest on recorded reasons and remain proportionate to estimated liability.

Additional security under section 8C of the U.P. Trade Tax Act may be demanded on recorded reasons where it is necessary to safeguard realization of tax dues, and the amount must remain proportionate to the estimated tax liability. On the facts discussed, the dealer's recent business, absence of disclosed property, and uneven turnover supported a nexus with revenue protection, so the demand was justified in principle. However, the quantum was found excessive in the circumstances and was reduced, with the registration consequence linked to furnishing the revised security within time.

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Issues: Whether the demand of additional security under section 8C of the U.P. Trade Tax Act, 1948 was justified on the facts found, and whether the consequential cancellation of registration could survive.

Analysis: Section 8C empowers the assessing authority to demand additional security where it appears necessary for proper realization of tax, penalty or other dues, and the amount must remain within the limit of the estimated tax payable on the dealer's turnover. The admitted facts showed that the dealer's business was of recent origin, no property was disclosed, the turnover at one place was nominal while the turnover at the branch was substantial, and the impugned order recorded reasons linking these circumstances to the need to safeguard revenue. The demand was therefore not arbitrary or without nexus merely because admitted tax had been paid for one month. At the same time, the amount demanded was considered excessive in the circumstances, warranting judicial reduction.

Conclusion: The demand of additional security was upheld in principle but reduced from Rs. 5 lakhs to Rs. 3 lakhs, with consequential cancellation of registration to stand cancelled if the reduced security was furnished within time.

Ratio Decidendi: Additional security under section 8C may be demanded on recorded reasons when necessary to protect revenue and ensure realization of tax dues, but the quantum must be proportionate to the estimated tax liability and the surrounding facts.

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