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2020 (2) TMI 403 - HC - VAT and Sales TaxReversal of excesss input tax credit - capital goods - supplier of goods paid VAT @12.5% instead of 4% - whether the respondent was justified in directing the petitioner to reverse the input tax credit availed on capital goods in excess of 4% vide the impugned order? - Section 2(11) of the TNVAT Act, 2006. HELD THAT:- The purpose of allowing input tax credit on capital goods and inputs are to reduce the cascading effect of the tax on the products / goods sold by a dealer under the provisions of the said Act. Under Section 19 (3) of the Act every registered dealer, is allowed into tax credit in the manner prescribed on the purchase of capital goods for use in the manufacture of taxable goods. The only restriction that is contained under the provision of Sub Section (6) of the Act. In this case, it is not the case of the respondent that there was deliberate ploy on the part of the dealer who sold the capital goods to the petitioner by charging tax at 12.5% to liquidate accumulated credit - whether the tax was paid at 4% or 12.5% as the case may irrelevant as far as the respondent is concerned as the issue is revenue neutral. Thus there is no reason why credit availed by the petitioner should be disallowed particularly in the light of the fact that intention of the legislature is to reduce the cascading effect of the tax the final product - impugned order do not sustain - petition allowed - decided in favor of petitioner.
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