(1) The security for registration may be furnished by the dealer in any of the following modes -

(i) By Fixed Deposit Receipt from a scheduled bank or nationalized bank pledged to the concerned Registering Authority ;

(ii) Cash Deposit in the Treasury under the Head 0040 - Sales Tax;

(iii) Bank Guarantee from a scheduled or nationalized bank agreeing to pay to the Government on demand the amount at any time during the currency of the certificate of registration;

(iv) By furnishing any other form of security as may be notified by the Commissioner;

(2) The security to be demanded by the Registering authority shall be:

(a) rupees fifteen thousand for dealers having an estimated annual turnover upto rupees twenty lac; & rupees thirty thousand for dealers having an estimated annual turnover of more than rupees twenty lac, and

(b) equal to 1% of the estimated gross annual turnover in respect of a dealer who applies for registration as a turnover tax dealer or a voluntary registration dealer and equal to 1% of the estimated taxable turnover of a casual dealer provided that in no case the security so fixed shall exceed rupees twenty thousand.

Provided if a dealer in whose case security has been demanded fails to pay the security so demanded within 15 days from the date of its demand the Registering Authority shall consign the file to records. In case a dealer there after chooses to register he shall do so by applying afresh.

Provided further that the security or additional security shall be refundable in the following manner when reasons for its demand no longer exist:-

a) if the security has been remitted by cash into the treasury it shall be refundable in the same manner as prescribed for refund of tax or penalty under Section 50.

b) if the security is in any other prescribed mode, the Jurisdictional Assessing Authority shall order its release.

3. If the registering authority is satisfied that due to extra-ordinary circumstances, the registered dealer needs to furnish more or additional security, he shall recommend the case to Commissioner with reasons to be recorded in writing for demanding more or additional security and the Commissioner shall fix the security as he may deem necessary keeping in view the facts of the case.