Penalty cannot be levied at detention stage without separate proceedings; goods released on tax payment

Penalty could not be demanded at the detention stage without separate proceedings for its imposition, as a detention notice cannot itself sustain a penalty levy at twice the tax amount. The vehicle and goods were directed to be released on payment of the tax indicated in the demand notice, while the authorities were left free to initiate appropriate penalty proceedings in accordance with law if warranted.

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Issues: Whether penalty could be demanded at the stage of detention of goods without initiation of separate proceedings, and whether the vehicle and consignment were liable to be released subject to payment of tax.

Analysis: The detention notice sought to levy penalty at twice the amount of tax even though no independent proceedings for imposition of penalty had been initiated. The Court followed its earlier view that such a penalty demand at the detention stage is not sustainable. At the same time, the goods were directed to be released only on payment of the tax indicated in the demand notice, leaving it open to the authorities to commence appropriate proceedings in accordance with law for penalty, if warranted.

Conclusion: Penalty could not be levied at the detention stage without separate proceedings, and the petitioner was entitled to release of the vehicle and goods on payment of the tax demanded.

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