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2014 (11) TMI 120 - HC - VAT and Sales TaxUndervaluation under Orissa VAT - sale of good quality goods as scrap - Release of confiscated goods - levy of heavy penalty - Violation of Art 14 Of Constitution - STO after investigation noticed that the goods covered by way-bill were found to be incorrect - Goods are found to be auto parts (spring) leaf in sets ; but the way-bill in support of the consignment discloses the goods to be scrap spring pati - Held that:- From the noting made in the show-cause notice and observations/findings of the STO, in his order dated August 27, 2011 (annexure 5) quoted above, it can be safely said that the driver of the vehicle submitted false/forged documents/way-bills covering the entire goods carried in the vehicle. It is certainly a case of fraud. STO has indicated valid reasons for holding that the goods in question loaded in the vehicle were new spring leaf sets and the value mentioned in the documents like way-bill and tax invoice has been understated and the actual value is much higher for the reasons stated in the impugned order. - STO has levied VAT at 13.5 per cent to the tune of ₹ 1,89,000 in the order passed under sub-section (5) of section 74 of the OVAT Act and opposite-party No. 2-revisional authority also confirmed such levy of VAT. Section 74(5) does not contemplate levy of VAT. It contemplates imposition of penalty only. However, sub-section (7) of section 74 provides that subject to the Rules as may be prescribed, the officer-in-charge of the check-post or barrier or the officer authorized under sub-section (3) may release the goods to the owner of the goods or to any person duly authorized by such owner on payment of penalty imposed under sub-section (5) in addition to tax payable thereon. A conjoint reading of sub-sections (5) and (7) of section 74 of the OVAT Act makes it dear that only on payment of the penalty imposed under subsection (5) in addition to the tax payable the prescribed authority may release the goods. It needs no emphasis that quantification of penalty depends on determination of tax. Unless, tax is determined first, no penalty can be quantified as contemplated in section 74(5). Any other interpretation shall render sub-section (5) of section 74 redundant - Decided against Assessee.
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