Can I dispute late cancellation fee with the hotel?

This question comes down to three:

1. Can the hotel charge your credit card (which they may have on file)?

   In your particular case it seems like you never authorized the charge for this particular night, since they required you to send the form as part of making the reservation. You did not send the form, and thus had no reservation. This also means they cannot charge your credit card - even if they got the number from other sources - as it would be unauthorized charge. If they do, I suggest calling the hotel and pointing out that unless they refund it right away, you will dispute it with your credit card company as unauthorized charge. Because the hotel does not have your authorization for this particular change, they would not be able to provide the evidence for dispute.

   And if they refuse to refund it, then file a dispute. Some businesses wrongly assume that they can charge you as long as they have your credit card details and they believe you owe them money. This is not correct. If the business believes you owe them, but you disagree (and thus do not authorize the charge), this means you have a civil dispute which should be resolved through legal means - negotiation, mediation, or court processing. This is not a carte blanche - you may still be find liable, and would have to pay way more than the initial charge - including interest, court costs and attorney fees - but that's the legal way to resolve civil disputes.

2. Can the hotel try to charge you some other way?

   Yes. They can send you a bill. You can ignore, but I recommend writing back to them and explain your story - they insisted for the authorization form to confirm the reservation, which you refused to send, so you assumed that the reservation was never made. This was supported by the fact that you haven't received any documents confirming the reservation (and thus if you appeared, the hotel could have said you had no reservation).

   There is also a chance they can go to court, but this doesn't seem likely. Not only the one night charge is unlikely to justify the effort, but the case doesn't seem to be strong for the hotel.

3. What should I do now?

   I would reply to the email the hotel sent to you, and explain the situation. They required the authorization to confirm the reservation, you did not submit authorization and thus forfeited this reservation. This means the hotel had no obligation to hold a room for you, but also this means the hotel could not charge anything. If the hotel doesn't have procedure in place to release reservations for which the form was not timely received, this is not your fault. State explicitly that you did NOT sign and send them the authorization form, and thus any charge they attempt will be treated by you as unauthorized, and will be disputed. That shall do.