Can a auto repair shop refuse to return your vehicle after you paid for it if you refuse to sign a release of liability?
You've left out so much that no one can answer you. Why is a release being asked for? What was repaired? What dispute has led to the unusual occurence? With no facts there is no way to answer you.
I agree. There appears to be something missing since it would be RARE for a repair shop to hold a vehicle AFTER the bill has been paid. Release forms usually come up when there is a dispute over multiple repairs, quality, etc. and the repair shop no longer wants your business. Even then, I have never heard of a reputable repair shop holding someone's vehicle hostage after getting paid.