Check-post detention of goods is limited to preventing tax evasion and cannot be used for unauthorised tax collection.

Check-post detention of goods in transit is permissible only to prevent tax evasion and cannot be used as a means of tax collection or on grounds not authorised by the governing sales tax law. Where the consignment is admitted to be a transfer to an agent and not a sale, detention cannot be justified on the assumption that the transfer by an unregistered dealer is taxable under the Central Sales Tax Act. A demand to release goods only on payment of tax and compounding fee, including on the footing of section 6-A and section 9(2), is unsupported if the statutory basis for detention is absent.

---

---

Issues: Whether detention of a consignment in transit was lawful when it was claimed to be a consignment transfer and whether release could be conditioned on payment of tax and compounding fee under the Central Sales Tax Act, 1956.

Analysis: The consignment was admitted to be a transfer to an agent and not a sale. The reason recorded for detention proceeded on the assumption that the transfer by an unregistered dealer was liable to tax under the Central Sales Tax Act, 1956, but no provision of that Act supported detention on that basis. The later order under section 6-A of the Central Sales Tax Act, 1956 likewise rested on an erroneous view that the declaration thereunder could be insisted upon only from a registered dealer in the State and that release could be made only on payment of compounding fee and tax under section 9(2) of the Central Sales Tax Act, 1956. Detention at a check-post can be used only to prevent evasion of tax and not for collection of tax or for reasons not authorised by law.

Conclusion: The detention orders were set aside and the goods were directed to be released forthwith in favour of the assessee.

Ratio Decidendi: A check-post detention is permissible only for preventing tax evasion and cannot be sustained on grounds unsupported by the governing sales tax law.

---