Recovery notice against non-heir partners was unsustainable; statutory C Forms could not be withheld without firm-level dues.

A recovery notice for penalty arising from a deceased sole proprietor's business could not be enforced against a later partnership firm or a partner who was not a legal heir, because liability for the proprietor's dues could not be fastened on them merely due to the subsequent business arrangement. The Court also held that statutory C Forms could not be withheld where the firm had no arrears of sales tax, penalty or interest. The demand notice was therefore set aside against the firm and partner, access to the C Forms was directed to be restored, and recovery was left open only against the deceased proprietor's legal heirs in accordance with law.

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Issues: (i) Whether the demand notice could validly fasten liability for penalty on the partnership firm and one partner for arrears arising from the deceased sole proprietor's business; (ii) Whether the petitioners were entitled to access and download C Forms when the firm had no arrears.

Issue (i): Whether the demand notice could validly fasten liability for penalty on the partnership firm and one partner for arrears arising from the deceased sole proprietor's business.

Analysis: The liability for the penalties had already been pursued in revision by the legal heirs of the deceased proprietor, and the petitioners had consciously carried the challenge to the penalty assessments. The Court therefore accepted that the legal heirs were liable for the penalty attributable to the deceased proprietor. At the same time, the impugned notice was addressed to the partnership firm and one partner who were not legal heirs of the deceased proprietor. Liability for the deceased proprietor's arrears could not be fastened on them merely by reason of the later business arrangement.

Conclusion: The demand notice was unsustainable against the partnership firm and the partner, and was set aside, while recovery was left open against the legal heirs in accordance with law.

Issue (ii): Whether the petitioners were entitled to access and download C Forms when the firm had no arrears.

Analysis: The power to withhold statutory forms under the Act operates where tax, penalty, interest, or other dues are payable. The Court noted that the firm itself had no arrears of sales tax, penalty, or interest. Once the demand notice was found unsustainable against the firm and partner, there remained no legal basis to prevent access to the statutory forms required for business.

Conclusion: The petitioners were entitled to download the C Forms, and the Department was directed to permit access forthwith.

Final Conclusion: The writ petition succeeded in part by setting aside the demand against the firm and partner and by directing release of the statutory forms, while preserving the Department's right to proceed against the legal heirs for the deceased proprietor's liability.

Ratio Decidendi: A recovery notice for a deceased proprietor's penalty cannot be enforced against a partnership firm or partner who are not the legal heirs, and statutory forms cannot be withheld in the absence of dues recoverable from the dealer concerned.

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