Release of detained goods cannot be tied to composition fee; tax may be paid voluntarily or under protest

Detained goods under the Tamil Nadu Value Added Tax Act were held releasable on payment of tax either voluntarily or under protest, because Section 67(4) permits release on that basis without requiring quashing of the detention notice. The composition fee could not be insisted upon as a pre-condition for release, since it was a distinct matter to be dealt with separately under the prescribed procedure. The authorities were directed to conclude the composition proceedings independently, while the goods were to be released forthwith on payment of tax.

---

---

Issues: (i) Whether the detained goods were liable to be released on payment of tax voluntarily or under protest under Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the composition fee could be insisted upon as a pre-condition for release of the goods, and how the composition proceedings were to be dealt with.

Issue (i): Whether the detained goods were liable to be released on payment of tax voluntarily or under protest under Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Section 67(4) contemplates release of goods on payment of tax or security, and such payment may be made either voluntarily or under protest. On that basis, the request for release of the goods was found capable of being met without insisting on quashing the impugned notice in its entirety.

Conclusion: The goods were directed to be released forthwith on payment of tax voluntarily or under protest.

Issue (ii): Whether the composition fee could be insisted upon as a pre-condition for release of the goods, and how the composition proceedings were to be dealt with.

Analysis: The demand towards composition fee was treated as distinct from the statutory basis for release of the detained goods. The authorities were directed to proceed separately under Section 72 of the Tamil Nadu Value Added Tax Act, 2006, following the prescribed procedure, and the composition fee demand was not allowed to operate as a condition precedent for release. The availability of revision under Section 54 was also noted.

Conclusion: The composition fee could not be imposed as a pre-condition for release, and the composition proceedings were left to be concluded separately in accordance with law.

Final Conclusion: The petition succeeded only to the extent of securing release of the goods on payment of tax, while the challenge to the notice itself was not accepted in full and the composition proceedings were permitted to continue separately.

Ratio Decidendi: Where goods are detained, release may be ordered on payment of tax voluntarily or under protest under the governing provision, and a separate composition demand cannot be made a pre-condition for such release.

---