(1) If the appropriate assessing authority is satisfied that a dealer, casual dealer or person who had furnished security demanded under rule 105 or rule 110 or rule 195 has failed to make proper and timely payment of tax and other dues or has shown his negligence in safety and security of waybills issued to him or has evaded tax in any way, he may, by an order in writing, forfeit the whole or any part of the security or additional security, furnished under rule 105 or rule 195.

(2)  The security furnished by a dealer under sub-rule (2) of rule 195 shall be kept held for a period of one year, from the date of issue of certificate of registration in favour of the dealer.

(3) The security furnished by a dealer or casual dealer or person on behalf of any dealer under sub-rule (6) of rule 125, shall be kept held for one year from the date of seizure of goods.

(4)  The dealer may adjust the security paid by him under sub-rule (2) and under sub-rule (6) of rule 125, that remains after forfeiture, if any, against the amount of tax, interest and late fee payable according to return or successive returns which is or are due immediately after the expiry of the period referred to in sub-rule (2) of this rule.