Sushil Harkauli, J. - (1.) WE have heard both sides and we are of the opinion that this writ petition can be finally disposed of at this stage itself.
(2.) BY Section 10 (8) of the U.P. Trade Tax Act, 1948, the Assessing Authority has been given the right to demand ''adequate' security to ''its satisfaction". What security would be adequate, and what security would satisfy the Assessing Authority would obviously be in the discretion of the Assessing Authority. But no such discretion can be arbitrary or whimsical; it must be exercised on logical considerations. Also it would appear to be desirable on part of the Assessing Authority to mention those reasons, at least briefly, in the order if the order requires giving of cash or bank guarantee as security. By way of example, where the assessee, for the reasons indicated in the order of the Assessing Authority, is considered not very reliable because of which it appears to be necessary to protect the Revenue's interest more securely, the Assessing Authority may be justified in demanding bank guarantee by way of security, which is definitely a more reliable security than the other forms of securities. Cash security may be justified, if the Assessee is totally untrustworthy. However, where the assessee has an established commercial concern of substantial size, continuing over past several years and is an existing tax payer, demanding of bank guarantee may not be desirable except where there are cogent reasons for requiring bank guarantee as security. The reason is that most Banks require pre-deposit of equivalent amount of cash for giving of Bank-guarantee. Thus while the assessee suffers due to blockage of his business capital, a bank guarantee does not give any advantage, benefit or gain to the trade tax department/Govt., in as much as the money is not available to the trade tax department/Govt. for utilization.
(3.) JUDGED on these parameters we are of the opinion that on the facts of the present case the Assessing Authority was not justified in demanding bank guarantee as security. We, therefore, dispose of this writ petition finally after hearing the learned counsel for the petitioner and the learned Standing Counsel with the direction that the security to be furnished under Section 10(8) by the petitioner will be to the satisfaction of the Assessing Authority, but will be other than cash or bank guarantee. Let a certified copy of this order be issued to the parties on payment of requisite charges within 48 hours.;