Section 12 — Responsibility of Municipality

(1) When called upon, by the Board, to furnish any information, return, particulars, records, documents or registers or any other material, the municipality shall furnish the same within the time specified in this regard.
(2) When called upon by the Board, a municipality shall fully cooperate with and assist the Board to perform its functions.
(3) Where a municipality fails, for whatever reason, to comply with any direction under sub-section (1) or sub-section (2) the Board may issue a show cause notice to the municipality for withholding, for a period not exceeding two years, a part of the financial transfers, not exceeding thirty per cent of its annual value during the preceding financial year, to be devolved by the State Government to that municipality. If the municipality still fails to comply with or fails to furnish a satisfactory guarantee in this regard, the Board may recommend such withholding to the State Government, where upon the State Government shall withhold such financial transfers for said period:
Provided that where the municipality, subsequently, complies with direction, the State Government shall release the financial transfers so withheld, on being satisfied with such compliance.