2018 (12) TMI 479 - HC - VAT and Sales Tax

Input tax credit - purchase of Generator sets and its parts which are capital goods and used in the generation of electricity - electricity further used for running the plant and machinery for production of goods - Held that - Considering the fact that the State itself issued clarification in the case of M/s Bhaskar Gensets Private Limited, Gurgaon, clarifying the legal issue in favour of the appellant and subsequent thereto even the Tribunal has accepted the appeal in the case of other assessee, we do not find any reason to decline the same relief to the appellant. The substantial question of law is answered in negative - Tribunal was not justified in declining the relief of input tax credit to the appellant of the tax paid on purchase of diesel set for generating power for running the plant and machinery for production of goods, as the same is available in terms of the clarification issued by the department itself - decided in favor of assessee.

Summary

Issues:
- Appeal involving the admissibility of Input Tax Credit on the purchase of generator sets and its parts used in the manufacturing of taxable goods for sale.

Detailed Analysis:

Issue 1: Admissibility of Input Tax Credit
The appellant, engaged in manufacturing and trading of bath mats and carpets, primarily for export, purchased generator sets due to power supply shortages to meet export commitments. Dispute arose over the input tax credit claim on the tax paid for the purchase. The assessing authority, First Appellate Authority, and Tribunal all rejected the claim. The appellant argued that relevant provisions of the Haryana Value Added Tax Act were misinterpreted, and cited a clarification from the State supporting the admissibility of input tax credit for similar cases. The State did not refute the issued clarification or the Tribunal's acceptance of similar appeals based on the clarification.

Issue 2: Interpretation of Law
The Tribunal found merit in the appellant's contention, acknowledging the necessity of the generator set for uninterrupted power supply to meet export deadlines. The Tribunal noted the significant portion of the appellant's turnover from exports and the use of the generator set for power generation to run plant machinery. The State's clarification, as sought by another entity and accepted by the Tribunal in a similar case, supported the appellant's claim for input tax credit on the purchase of the generator set components used for production.

Issue 3: Finality of Tribunal's Decision
The Tribunal's decision in a similar case, based on the State's clarification, had reached finality. The Tribunal upheld the appellant's entitlement to input tax credit for the purchase of generator set components. Given the State's clarification and the Tribunal's consistent decisions, the present appeals were allowed. The Tribunal's denial of input tax credit to the appellant was deemed unjustified, as the relief was available based on the State's issued clarification.

In conclusion, the High Court allowed the appeals, answering the substantial question of law negatively. The Tribunal's refusal to grant input tax credit on the purchase of the generator set for running plant machinery was deemed incorrect, as the relief was supported by the State's clarification and consistent Tribunal decisions in similar cases.