(1) Where the registering authority has reasons to believe that a dealer is likely to make default in payment of tax or other amount due under this Act, he may, by order in writing, demand security from the dealer for an amount not exceeding one half of the tax payable on the turnover of the dealer for the year as estimated by the registering authority.

(2) Notwithstanding anything contained in sub-section (1), the registering authority may, at the time of registration, demand security by order in writing, from every dealer effecting first sale of goods within the State, an amount not exceeding one half of the tax payable on the turnover of the dealer for the year as estimated by the registering authority:

Provided that the registering authority shall have the power to demand at any time additional security if such authority has reason to believe that the turnover estimated under sub-sections (1) or (2) was too low.

Provided further that no security or additional security shall be demanded under this sub-section from a dealer falling under clause (ii) of subsection (2) of section 15;

(3) The dealer from whom security or additional security is demanded shall furnish it within the prescribed time and in the prescribed manner.

(4) where a dealer getting registered under section 15 had furnished any security in accordance with the provisions of the Kerala General Sales Tax Act, 1963 (15 of 1963) notwithstanding anything to the contrary contained in this Act the security furnished under the provision of the said Act shall be deemed to have been furnished under the provisions of this Act.