Statutory release of detained goods operates independently from composition proceedings and compounding demand under the prescribed procedure.

Detained goods were held releasable on compliance with the statutory release mechanism, because the governing provision allowed release on payment of tax or such security as required, and the authority was bound to act on that payment. The Court also held that a separate composition notice and demand for compounding fee had to be dealt with independently under the prescribed procedure after giving an opportunity and deciding the matter on merits. Accordingly, the demand relating to compounding did not prevent release of the goods, and the composition proceedings were left to be determined separately in accordance with law.

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Issues: (i) Whether the detained goods were liable to be released on payment of tax alone under the statute. (ii) Whether the demand for compounding fee under the composition notice could be dealt with independently of the request for release of goods.

Issue (i): Whether the detained goods were liable to be released on payment of tax alone under the statute.

Analysis: The detention arose from a suspected mismatch in movement documents and the absence of compliance with the statutory transit requirements. The governing provision permitted the assessee to approach the authority for release of the goods on payment of tax or such security as required. The Court followed the earlier view that, for release of detained goods, compliance with the statutory release mechanism was sufficient and that the authority was bound to release the goods forthwith on such payment.

Conclusion: The petitioner was entitled to release of the detained goods on payment of tax alone under the statutory release provision.

Issue (ii): Whether the demand for compounding fee under the composition notice could be dealt with independently of the request for release of goods.

Analysis: The composition provision contemplated a separate procedure and required an order on merits after giving an opportunity. The composition notice, therefore, could not be treated as part of the immediate release process for the goods. The Court held that the composition issue had to be considered independently in accordance with the statutory procedure.

Conclusion: The demand relating to compounding was to be adjudicated independently and was not a bar to release of the goods on payment of tax.

Final Conclusion: The writ petition was disposed of by granting release of the detained goods on compliance with the statutory payment requirement, while leaving the composition proceedings to be decided separately on merits.

Ratio Decidendi: Where the statute provides a distinct mechanism for release of detained goods on payment of tax or security, that mechanism operates independently of any separate composition proceeding, which must be decided on its own merits in accordance with the prescribed procedure.

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