(1) The Commissioner or the authority to whom power has been delegated under section 26 or the appropriate assessing authority of a dealer on whose behalf security has been furnished under rule 125, may on application by a dealer, casual dealer or person, refund any amount of security or part thereof if such security is either not required for the purposes for which it was furnished or there shall be no such amount of tax payable by him under the Act for which the amount of such security can be adjusted.

(2) An application for refund of security under sub-rule (1) shall be made after the expiry of the period specified in the order passed under sub- rule (1) of rule 195 or the period referred to in sub-rule (2) or in sub-rule (3) of rule 196 and this application shall contain all the particulars in respect of mode and date of furnishing the security.

(3) On receipt of application under sub-rule (2), if the said authority is satisfied about the bonafideness of the application, he shall refund the amount of security furnished or part thereof if such security is not required for the purposes for which it was furnished.