(1) Where a dealer who has become liable to pay tax under section 10 or under section 11 or under section 14, makes an application for registration under rule 5 or under rule 5A, as the case may be, and where, upon examination of the application and the documents submitted and after making enquiry, if any, as deemed fit and proper, the appropriate registering authority is satisfied that the dealer is otherwise eligible to be assigned a registration number but is required to furnish security under sub-section (2B) of section 24, the appropriate registering authority shall demand, before assigning such registration number, a security of rupees one lakh only to be furnished under sub-section (2B) of section 24 and assignment of registration number and the issue of registration certificate under rule 6 or under rule 6B, as the case may be, shall not be made to such dealer unless the dealer furnishes such security :

Provided that the security furnished by a dealer under the sub-rule (1) shall be kept held for a period of one year from the date of issue of certificate of registration in favour of the dealer.

(2) The provisions of sub-rule (2), sub-rule (3) and sub-rule (4) of rule 195 A, so far not inconsistent with this rule, shall apply mutatis mutandis in respect of security furnished under this rule.