Withholding of C declaration forms must be reasonable where only penalty is disputed and appeals remain pending.

The power to withhold C declaration forms under the Puducherry Value Added Tax Act was recognised as valid for recovery purposes, but its exercise must remain reasonable. Here, the dealer had already paid the assessed tax, the second appeals concerned only the penalty levy, no pre-deposit of penalty was required, and the stay petitions before the Appellate Tribunal were still pending. In those circumstances, continued withholding of the forms was held unjustified on the facts, and release of the eligible C declaration forms was directed.

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Issues: Whether the respondent was justified in withholding C declaration forms pending disposal of the petitioner's appeal and stay petitions challenging the penalty levy.

Analysis: The statutory power to withhold C declaration forms was recognised under Section 43(1) of the Puducherry Value Added Tax Act, and that power had also been upheld in earlier proceedings. However, on the facts, the petitioner had already paid the tax determined in assessment, the challenge in the second appeals was confined to the penalty component, and no pre-deposit of penalty was mandated for the appeal. Since the correctness of the penalty levy had not attained finality and the stay petitions were still pending before the Appellate Tribunal, continued withholding of the declarations was found to be unduly harsh.

Conclusion: The respondent's power to withhold C declaration forms was affirmed, but its exercise against the petitioner was held unjustified on the facts, and release of the eligible C declaration forms was directed.

Ratio Decidendi: Even where the statute empowers withholding of declaration forms for recovery purposes, that power must be exercised reasonably and cannot be continued on peculiar facts where the disputed penalty has not attained finality and the dealer is otherwise entitled to the forms.

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