Release of seized goods deferred until compounding notice is decided after considering the dealer's reply

The writ court should not direct release of seized goods merely on payment of tax where a compounding notice is pending and the dealer's reply has not been considered. The authority must first examine the representation and pass a final order in accordance with law, because liability for compounding fee may still arise and recovery may be difficult if the dealer remains unregistered. The direction for release of goods was therefore set aside, and the matter was remitted for a final decision on the compounding notice after considering the dealer's reply.

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Issues: Whether the writ court was justified in directing release of the seized goods on payment of tax without permitting the authority to consider the compounding notice and pass a final order after considering the dealer's reply.

Analysis: The respondent was not a registered dealer and had been issued a compounding notice proposing tax and compounding fee. The Court held that the authority ought to consider the respondent's representation and take a final decision in accordance with law. In the circumstances, it was not to direct release of the goods merely on payment of tax, as the liability to pay compounding fee could still arise and recovery would become difficult if the dealer remained unregistered.

Conclusion: The direction for release of goods was set aside and the authority was required to take a final decision on the compounding notice after considering the respondent's reply.

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