Check-post detention cannot justify compounding fee absent tax evasion and proper documents at interception.

A compounding fee for detention at a check-post could be levied only where tax evasion was established at the time of interception. As the goods were accompanied by valid transit memos, form 45-A and other proper documents, no evasion was shown at detention and the statutory basis for levy was absent. The levy was therefore without jurisdiction and was set aside, with refund directed. Any later sale in Chennai, if taxable, had to be assessed separately under the Tamil Nadu General Sales Tax Act, 1959.

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Issues: Whether compounding fee could be levied under section 46(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 when the goods were detained at the check-post despite accompanying valid documents and transit records.

Analysis: The goods were found to be accompanied by valid documents, including transit memos and form 45-A, at the time of detention. For a levy under section 46(1)(a), there must be a clear case of evasion of tax recoverable under the Act at the stage of detention. Since the goods were supported by proper documents and no tax evasion was established at the check-post, the statutory basis for compounding fee was absent. Any subsequent sale in Chennai, if otherwise taxable, would have to be dealt with independently under the appropriate provisions of the Tamil Nadu General Sales Tax Act, 1959.

Conclusion: The levy of compounding fee under section 46(1)(a) was without jurisdiction and was rightly set aside; the petitioner was entitled to refund.

Final Conclusion: The petition succeeded on the ground that the detention-based compounding levy could not be sustained in the absence of tax evasion at the time of check-post interception, leaving any later taxable sales to separate assessment proceedings.

Ratio Decidendi: A compounding fee under section 46(1)(a) can be imposed only where tax evasion is established at the time of detention and the goods are not supported by valid documents.

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