5.The learned counsel for the petitioner submitted that the impugned order is in violation of the principles of natural justice as no notice was issued prior to deducting a sum of Rs.26,56,749/- from the refund claim of Rs.1,64,39,081/-. He would further submit that in terms of sub-section 17 of Section 19 of the TNVAT Act if the input tax credit determined by the Assessing Authority for the year exceeds the tax liability for that year, the excess may be adjusted for any outstanding tax due from the dealer. However, prior to exercising such power, the dealer is entitled to be heard in the matter, especially, when the refund application was kept pending for over two years. Further, it is submitted that the respondent failed to adhere to the directions issued by this Court in the case of I.T.W. Signode India Limited vs. State of Jharkhand and others reported in (2007) 8 VST 182. Further, it is submitted that the deduction of Rs.26,56,749/- has been made alleging mismatch between the Annexure I and II of the other end dealer and this has been held to be unsustainable by this Court in several decisions. Further, it is submitted that if the vendor has not remitted tax, the Department has to invoke Section 27 of the TNVAT Act and proceed against the vendor and not to penalize the petitioner purchaser. In support of such contention, reliance was placed on the decision in the case Althaf Shoes (P) Ltd., vs. Assistant Commissioner (CT), Valluvakottam Assessment Circle, Chennai-6 (CVJ Judgment) reported in (2012) 50 VST 179, Sri Vinayaga Agencies vs. Assistant Commissioner (CT), Vadapalani-I Assessment Circle, Chennai and another (RSJ Judgment) reported in (2013) 60 VST 283 and Infinity wholesale Ltd. Assistant Commissioner (CT), Koyampedu Assessment Circle, reported in (2015) 82 VST 457) which was confirmed by the Hon'ble Division Bench in W.A.No.775 of 2016.
