Release of detained goods on tax deposit while preserving challenge to tax and compounding fee under statutory remedy

Detained goods were directed to be released on deposit of the tax demanded, where the detention had arisen from alleged absence of transport documents and invocation of VAT inspection and compounding provisions. The petitioner maintained that the movement was by branch transfer and not tax evasion, and offered to deposit the tax amount to secure release. The Court accepted release on payment of the tax shown in the impugned order, while preserving the petitioner's right to challenge the tax and compounding fee through the statutory remedy under the Act.

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Issues: Whether the detained goods were liable to be released on payment of the tax demanded, leaving the petitioner free to challenge the tax and compounding fee under the statutory remedy.

Analysis: The detention arose from the alleged absence of required transport documents and the consequent invocation of the value added tax provisions relating to inspection and compounding. The petitioner asserted that the movement was by branch transfer and that the matter did not involve tax evasion, while also offering to deposit the tax amount to secure release of the goods. The respondent stated that the goods would be released once the tax shown in the impugned order was paid. The Court accepted that course and directed release of the detained goods upon deposit of the tax amount, while preserving the petitioner's right to assail the tax and compounding fee under the statutory mechanism.

Conclusion: The detained goods were ordered to be released on deposit of the tax demanded, and the challenge to the tax and compounding fee was left open under the Act.

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