Bona fide use of declaration forms may justify withholding further forms and demanding security to protect revenue.

Where statutory declaration forms are tied to bona fide commercial use and revenue protection, the authority may withhold further ST-1 forms and require additional security if recorded material suggests misuse, inflated or interpolated declarations, collusion, or other conduct prejudicial to tax realisation. Section 18 of the Delhi Sales Tax Act, 1975 and Rule 8(4)(a) of the Delhi Sales Tax Rules were treated as enabling preventive action, including refusal of forms or issue of fewer forms where bona fides are not shown. The dealer had to be heard on the security demand, but the challenge failed and the protective action was upheld.

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Issues: Whether the sales tax authorities could refuse further ST-1 declaration forms to a registered dealer and require additional security on the basis of material suggesting misuse of earlier forms and possible evasion of tax.

Analysis: The scheme of the Delhi Sales Tax Act, 1975 and the Delhi Sales Tax Rules links the issue of declaration forms with bona fide commercial use and with the protection of revenue. Section 18 of the Delhi Sales Tax Act, 1975 permits security to be required for proper realisation of tax and for proper custody and use of forms. Rule 8(4)(a) of the Delhi Sales Tax Rules authorises rejection of the application or issue of a lesser number of forms where the authority is satisfied, for recorded reasons, that the forms have not been used bona fide or are not required bona fide. The Court treated purchases and sales as integral parts of the dealer's business activity and held that the authorities were not bound to ignore material showing alleged collusion, inflated or interpolated declarations, or disposal of goods in a manner detrimental to revenue. The Court also held that the preventive power to insist on security could be exercised, though the dealer had to be heard on the security demand.

Conclusion: The authorities were entitled to insist on additional security and to decline further ST-1 forms unless the required security was furnished; the challenge to that course failed.

Final Conclusion: The writ petition did not succeed, and the revenue's protective action regarding declaration forms and security was upheld.

Ratio Decidendi: Where statutory declaration forms are linked to bona fide use and revenue protection, the authority may withhold further forms and demand security if material indicates abuse or non-bona fide use of the forms.

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