Goods detention and compounding fee dispute: release on tax payment while revision against the fee remains open.

Goods detained in transit may be released on payment of the tax demanded where the revenue's interest needs protection, while the taxpayer is still left free to contest the dispute on merits. The Madras High Court's approach preserved a remedy for the petitioner by allowing the goods to be released against tax payment, rather than leaving the party without relief. At the same time, the demand for compounding fee was not finally determined in that proceeding and the petitioner was given liberty to pursue the statutory revisional remedy after release, for consideration on merits and in accordance with law.

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Issues: Whether the goods detention order and demand for compounding fee could be interfered with, and whether the petitioner was entitled to release of the goods on payment of tax with liberty to pursue further challenge to the compounding fee.

Analysis: The petitioner asserted that the transaction was supported by documents and was not in violation of the tax law, while the respondent relied on defects in the accompanying records and invoked the power to compound the offence. The Court held that the petitioner should not be left without a remedy and should be permitted to contest the matter on merits. At the same time, the revenue's interest was protected by directing payment of the tax demanded as a condition for release of the goods. On the compounding fee, the Court granted liberty to invoke the statutory revisional remedy after release of the goods, to be considered on merits and in accordance with law.

Conclusion: The detention was not finally set aside in full, but the goods were ordered to be released on payment of the tax demanded, and the challenge to the compounding fee was relegated to revision.

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