Check-post detention and release: seized goods must be released after penalty payment and cannot secure a seller's later tax dues.

Where goods are detained under check-post provisions for defective documentation, payment of the imposed penalty by the transporter triggers the statutory requirement to release the seized tankers and goods in the transporter's favour. The goods cannot be retained to recover the seller's alleged tax dues once the sale had already been completed and the sale price received, because ownership had passed before the tax demand arose. The detention therefore becomes unsustainable after compliance with the penalty requirement, and the recovery mechanism cannot be extended to property no longer belonging to the alleged defaulter.

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Issues: Whether, after payment of the penalty by the transporter under the check-post provisions, the seized tankers and goods were required to be released in favour of the transporter, and whether the goods could be retained for recovery of the seller's alleged tax dues after the sale had already been completed.

Analysis: The goods were detained under the check-post provisions for want of proper documents and penalty was imposed on the transporter. The transporter thereafter exercised the composition option and paid the penalty. Once the penalty stood paid, the statutory scheme required release of the seized goods in favour of the transporter under the provision permitting such release on payment of penalty. The attempt to retain the goods for recovery of the seller's tax dues was not justified because the material on record showed that the goods had already been sold and the seller had received the sale price, so ownership had already passed before the tax demand was crystallised. In that situation, the detained goods could not lawfully be used for recovery of the seller's dues.

Conclusion: The detention of the goods after payment of penalty was unsustainable and the transporter was entitled to release of the tankers with goods.

Final Conclusion: The petition succeeded and the statutory power of detention could not be used to deny release of the goods once the transporter had complied with the penalty requirement and the seller's tax demand had arisen after the sale was complete.

Ratio Decidendi: Where a transporter pays the penalty imposed under the check-post provisions, the seized goods must be released in favour of the transporter, and goods already sold and no longer belonging to the defaulter cannot be retained for recovery of that person's tax liability.

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