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2018 (6) TMI 902 - HC - VAT and Sales TaxValidity of Assessment Order - TNVAT Act - denial of Input Tax Credit - Stock Variation - Penalty u/s 27(3) of the Act - whether the manner in which the impugned Assessment made is legally sustainable? - Held that:- The only reason given by the respondent for denying the Input Tax Credit on the said amount is that their selling dealers have not paid the tax collected from the petitioner into the Government Treasury. Thus, it is not on account of the default committed by the petitioner, but even as per the demand of the respondent, it is on account of the fact that petitioner's selling dealer has not remitted the tax collected into the Government Treasury. This cannot be a reason for reversing the Input Tax Credit, as held by this Court in Sri Vinayaga Agencies Vs. Assistant Commissioner (CT), Vadapalani [2013 (4) TMI 215 - MADRAS HIGH COURT] - denial of credit unsustainable. Stock variation - The respondent has failed to take note of any of the objections filed by the petitioner in their reply dated 10.01.2018 - Held that:- The respondent merely proceeded on the basis that the defects were admitted during the course of inspection. This finding is illegal and not sustainable - The respondent, being a statutory authority, is bound to consider the objections filed by the petitioner and the documents produced, examine the correctness of the same and then take a decision - the finding with regard to the second issue set aside. Penalty u/s 27(3) of the Act - Held that:- The respondent should bear in mind the legal principle, which has been evolved in various decisions and as to when and under what circumstances, penalty would be attracted - in the absence of any specific reason recorded by the authority, attributing mens rea to the petitioner, the question of levy of penalty or making equal time addition does not arise - penalty set aside. Petition allowed.
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