Input credit eligibility in restaurant ?

Hi all, One of my client is a running a hotel in hyderabad and whose turnover is less than 1.5 cr. He collected the vat @ 14.5 % and remitted to the Department @ 14.5% after claiming input credit. But the department is saying that, since your turnover is less than 1.5 cr, you are not eligible collect the vat @ 14.5%, you are eligible to claim only @ 5% without claiming any input credit you have to pay all the amount collected. My concern he unknowingly claimed @ 14.5% and remitted to the department at the same rate. is there any judgement in any court saying that when the client paid higher rate of tax then he is eligible to claim input.