(1) Where the Registering Authority is of the opinion that a dealer who is liable to pay tax should furnish security for the proper payment of tax payable by him, the said authority may direct him to furnish, within such reasonable time not exceeding four days or earlier, as may be fixed by the said authority, security for an amount which, in the opinion of the said authority will be equivalent to the tax estimated by the said authority as being payable by the dealer for one quarter. In making such estimate the said authority may take into account the gross turnover if any, of the dealer during the preceding year, its trend at the time the estimate is made, the nature of the goods dealt in by him and such other factors as may, in the opinion of the said authority, assist in making a proper estimate. Where, for any reasons, no such estimate is possible the said authority may fix such amount, as may be deem just and proper.

(2) Such security may, subject to satisfaction of the Registering Authority, be furnished by the dealer, in any of the following ways, namely -

(a) by depositing with the said authority Government securities for the amount fixed by the said authority; or

(b) by depositing such amount in cash, in a Government Treasury; or

(c) by depositing such amount into the different schemes of the Post Office and pledging the such Certificates of deposit and depositing the same with the said authority; or

(d) by furnishing two Sureties, who are registered dealers and are regularly abiding the provisions of the Repealed Act as well as under the Act, and are acceptable to the said authority, by executing a security bond for such amount in Form JVAT 115; or

(e) by furnishing to the said authority a guarantee from a Nationalized Bank approved in this behalf by the said authority, agreeing to pay to the State Government, on demand the amount of security fixed by the said authority.

Provided such security shall also be furnished once in every five years.

(3) At any time, the said authority may to his satisfaction, increase or reduce the amount of security furnished in this behalf.