Withholding of C declaration forms may be restrained where tax is paid and the penalty dispute remains pending in appeal.

Where tax or penalty dues exist, the authority may withhold C declaration forms as a recovery measure, but that power can be declined on the facts where the tax liability has been paid and the penalty dispute remains pending in appeal. The Madras High Court therefore treated continued withholding as harsh in the circumstances, granted limited relief by directing release of the eligible forms, and preserved the authority's statutory power subject to the appellate tribunal's orders. It also directed the tribunal to decide the pending stay petition expeditiously.

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Issues: Whether the petitioner was entitled to release of C declaration forms pending the second appeal and stay petition, notwithstanding the respondent's power to withhold such forms against a defaulting dealer.

Analysis: The Court accepted that the statutory scheme empowered the respondent to withhold C declaration forms where tax or penalty dues were involved. At the same time, it noted that the assessment had already been challenged in second appeal and the stay petition was pending before the appellate tribunal. The Court found that the petitioner had paid the tax and that the dispute regarding the penalty had not attained finality, making continued withholding of the forms harsh in the peculiar facts of the case. The Court also directed the appellate tribunal to hear and decide the pending stay petition expeditiously, with further action by the respondent to remain subject to the tribunal's orders.

Conclusion: The petitioner was held entitled to release of the C declaration forms eligible to it, and the respondent was directed to release them.

Final Conclusion: The writ petition was disposed of by granting limited relief to the petitioner while preserving the respondent's statutory power and making future action subject to the appellate tribunal's decision.

Ratio Decidendi: Even where the authority has power to withhold statutory forms as a recovery measure, that power may be declined in exercise on the facts when the underlying penalty dispute is pending in appeal and the taxpayer has already discharged the tax liability.

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