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2019 (9) TMI 236 - HC - VAT and Sales TaxGrant of stay against recovery of dues - requirement of pre-deposit - disallowance of tax credit - whether the first appellate authority and the Tribunal were justified in directing the petitioners to make pre-deposit in terms of the orders passed by them? - HELD THAT:- At the time when the assessment orders were made, the petitioners did not have the copies of the assessment orders made in the case of the vendors, the petitioners did not have any opportunity to prove the genuineness of such transactions. Sub-section (7A) of section 11 of the GVAT Act envisages disallowance of tax credit in excess of the amount of tax paid in respect of the same goods. Therefore, to disallow tax credit on any purchase, it has to be established that it is in respect of the very goods purchased by a dealer that the tax has not been paid. Input tax credit cannot be disallowed by working out the percentage of purchases made from a dealer whose registration is cancelled, without first establishing that in respect of the goods purchased by the dealer, the vendor had not paid tax. The court is of the view that the petitioners have made out a strong primafacie case in their favour - Under the circumstances, the Tribunal and the first appellate authority were not justified in directing payment of huge amount of pre-deposit for the purpose of admitting the appeal and staying recovery. The matters are remanded to the first appellate authority to decide the matters afresh in accordance with law and on merits, on the basis of payment already made and treating the aforesaid property of the partner of the petitioners as security towards the pre-deposit for admission of appeals and grant of stay - petition allowed by way of remand.
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