(1) Where the registering authority decides to demand security or additional security under section 17, it may direct the dealer, in writing, to furnish, within a period, which shall not be less than fifteen days, as may be fixed by the said authority, security for such amount as may be specified in the notice in Form No. 6 D. In making the estimate of turnover for the purpose of fixing the quantum of security the said authority shall take into account the taxable turnover of the dealer, if any, during the preceding year, the trend of business at the time the estimate is made, the nature of the goods dealt in by him, and such other factors as may, in the opinion of the said authority, assist it in making a proper estimate. No security shall, however, be demanded from a dealer who applies for registration as a dealer under sub-section(5) of section 6.

(2) The security or additional security may be furnished by the dealer in any of the following ways, namely: -

(a) by depositing as security in the Government Treasury the amount fixed by the said authority and pledging the pass book to and depositing it with the said authority; or

(b) by depositing with the said authority Government securities for the amount fixed by the said authority; or

(c) by depositing security amount in the Post Office Savings Bank and pledging the pass book to and depositing it with the said authority; or

(d) executing a security bond for such amount in Form No.6 with two sureties, solvent enough for the amount assured and acceptable to the said authority; or

(e) by a bond prescribed under rule 85 for the amount fixed by the said authority in Form No. 6A, duly registered, along with title, possession and valuation certificates obtained from the Tahsildar concerned and the value of property shall not be lower than the amount, shown in the bond; or

(f) by means of a bank guarantee in form No.6 C, from a nationalized or scheduled bank, or of any bank authorised under Rule 26 or of any branch thereof located in the State; or

(g) by depositing the amount in the National Savings Certificate and pledging the same to and depositing it with the said authority; or

(h) by depositing with the said authority the title deeds relating to any property owned by the assessee sufficient to cover the amount of security demanded by such authority.

(3) The security or additional security furnished shall be maintained in full so long as the registration certificate continues to be in force and may, in the event of default of payment of any tax or any other amount due under the Act be liable to adjustment towards such tax or other amount due, after due intimation to the dealer.

(4) Where a person who stood as surety by signing the bond in Form 6 furnished under sub-rule (2) desires to withdraw from the bond, he shall duly serve on the dealer who had executed the bond and to the registering authority, of his desire to do so. Thereupon the dealer shall within sixty days furnish fresh security in any of the manner specified under sub-rule (2) for the amount of the bond and the withdrawal shall be operative from the date on which such fresh security is furnished.

(6) In the case of death or insolvency of any of the sureties furnished by a dealer in the form of a surety bond under clause (d) of sub- rule (2), the dealer shall within fifteen days of the occurrence of any of the aforesaid events, inform the registering authority and shall within sixty days of such occurrence furnish a fresh surety bond or furnish other security as prescribed under sub- rule (2).