Release of detained goods on tax payment cannot be conditioned on compounding fee; compounding may proceed separately.

Detained goods in transit were held releasable on payment of tax or adequate security under section 67(3)(b)(2) of the Tamil Nadu Value Added Tax Act, 2006, and the compounding fee could not be insisted upon as a pre-condition for release. The Court treated compounding under section 72 as a separate statutory process and permitted those proceedings to continue independently in accordance with law. It also noted the availability of the statutory revision remedy under section 54.

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Issues: Whether the detained goods were liable to be released on payment of tax without insisting upon the compounding fee as a pre-condition, and whether the authorities could proceed separately for compounding in accordance with law.

Analysis: The goods were detained in the course of transport, and the Court relied on the scheme of section 67(3)(b)(2) of the Tamil Nadu Value Added Tax Act, 2006 to hold that the authorities could require payment of tax or adequate security for release of the goods. Following the earlier decision cited before it, the Court held that, for immediate release of the goods, the transporter could be directed to pay tax. At the same time, the compounding fee was to be dealt with separately under section 72 of the Tamil Nadu Value Added Tax Act, 2006, and could not be insisted upon as a condition precedent for release. The Court also noted the statutory revision remedy under section 54 of the Tamil Nadu Value Added Tax Act, 2006.

Conclusion: The goods were directed to be released on payment of tax, without requiring the compounding fee as a pre-condition, and the compounding proceedings were to continue in accordance with law.

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