Cash-security for coal import forms upheld as reasonably linked to tax liability and not arbitrary.

A cash-security requirement for issuance of declaration forms for coal imports by rail under section 8C(3A) of the U.P. Trade Tax Act, 1948 was upheld because the Commissioner's general order was within statutory power and the amount fixed had a reasonable nexus with the likely tax liability. The court considered coal a notified commodity and relied on the rise in coal prices, freight, and selling prices, as well as the fact that a similar security for coal imports by road had already been sustained. The security of Rs. 120 per metric ton was found neither arbitrary nor confiscatory, and the writ petition challenging the circular was rejected.

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Issues: Whether the circular fixing cash security at Rs. 120 per metric ton for issuance of declaration forms for import of coal by railways under section 8C(3A) of the U.P. Trade Tax Act, 1948 was arbitrary or reasonable nexus with the tax liability.

Analysis: The Commissioner was empowered under section 8C(3A) to issue a general order requiring cash security for prescribed forms. Coal was a notified commodity, and the impugned security was examined against the background of the increase in coal prices, freight, and selling prices. The Court also noted that an earlier circular fixing security for coal import by road had been upheld, and the impugned amount for rail import was lower than the amount fixed for road import.

Conclusion: The fixation of cash security at Rs. 120 per metric ton was held to have a reasonable nexus with the object of the provision and was not arbitrary or confiscatory.

Final Conclusion: The writ petition challenging the circular fixing cash security for import of coal by railways was rejected.

Ratio Decidendi: A cash-security requirement imposed under statutory power will not be invalid if it bears a reasonable nexus to the tax liability and the surrounding commercial conditions, and is not shown to be arbitrary or confiscatory.

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