Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2022 (4) TMI HC This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2022 (4) TMI 1488 - HC - VAT and Sales Tax


Issues:
1. Denial of input tax credit for goods consumed in manufacturing finished goods.
2. Classification of goods as consumables instead of raw material.
3. Applicability of notification dated 31.03.2008 prospectively.

Analysis:
1. The revisionist contested the Assessing Authority's decision to deny input tax credit for goods, specifically welding electrodes, used in manufacturing finished goods. The Tribunal upheld the denial based on the view that the goods were consumables, not raw materials, for the Assessment Year 2006-07. The revisionist argued that welding electrodes should be considered raw material, citing Supreme Court precedents where items integral to production were deemed raw materials even if they did not physically appear in the final product.

2. The revisionist's counsel referenced judgments like "Collector of Central Excise, New Delhi vs. Ballarpur Industries Ltd." and "Tata Engineering & Locomotive Company Ltd. vs. State of Bihar" to support the contention that goods like welding electrodes, essential for manufacturing pre-fabricated structures, should be classified as raw material due to their integral role in the production process. The Supreme Court's interpretation emphasized that raw material need not be physically present in the end product to qualify as such.

3. Drawing from the principles established in previous cases like "BOC India Ltd. vs. State of Jharkhand" and "Tata Steel Ltd. vs. State of Jharkhand," the High Court concluded that welding electrodes, despite losing their identity in the final product, were crucial raw materials for manufacturing pre-fabricated structures. Consequently, the Assessing Authority and the Tribunal erred in denying input tax credit to the revisionist. The court allowed the revision, set aside the previous orders, and directed reassessment of the tax liability with the benefit of input tax credit, clarifying that the Amending Act, 2008, had prospective application and did not affect the Assessment Year 2006-07.

 

 

 

 

Quick Updates:Latest Updates