Repayment of vat and panelty and int charged

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jay (Querist)
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04 October 2011 dealer claim refund of rs. 150000/- input credit of tax invoice purchase against tax free sales in f.y. 2007-08 input vat rs. 150000/- and gujarat commercial tax depart issued the refund amount after necessary procedure. now the assessment was done and the assessing officer passed the order that the refund dealer claimed in year : 07-08 and received from dept is not refundable.so demand raised of rs. 150000/- with interest and panelties. dealer aggree to pay the repayment of refund rs. 150000/- but how can the dealer to liable paid interest and panelty of depart. mistake. and which section is liable in this matter because if dealer is not liable for refund so the application is rejected by dept at the time of refund but after 3 yrs. how can dept charged panelty and int. so please do needful in this matter.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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19 October 2011 Mr Jay,
As you have explained some(Rs150000)input tax credit was claimed and refund was paid by the department by accepting your return as correct initially. Later on verifying the records of the dealer it was found that the return of the dealer was wrong and the refund claim also.Therefore,
as the reund received was illegal it was demanded back by the department with interest and penalty.The action taken by the department is correct.
MJK

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