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TMI Blog2015 (8) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... and assembly division, cylinder block machining division and cylinder head block machining division. The assessee has filed monthly returns for all the nine tax periods from April, 2005 to December, 2005. The assessee claimed input tax deduction and filed VAT-100 for all the tax periods on the local purchases of raw-materials, consumables etc. which are consumed in the execution of labour work undertaken on behalf of others and also used in the manufacture of his own goods which are meant for sale. The asses see also claimed input tax rebate on the purchase of computer, electronic goods and parts thereof which are used in the processing/manufacturing of his goods as well as the job work and are also used to maintain the books of accounts and to raise tax invoices etc. The assessee also purchased raw-materials from unregistered dealers and used in the above said activity. 3. An inspection was carried out in the assessee's premises by the authorities on 20th, 21st and 23rd of January 2006. On scrutiny of the entire records maintained by the assessee, the authorities were of the view that the assessee has wrongly claimed the deduction of input tax rebate on purchase of raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rical goods, electronic goods and parts thereof as these goods are utilized for preparation of accounts and processing of goods of others. The Entry No.3 of the Fifth schedule does not envisage such kind of restriction. Accordingly, all the appeals were allowed. However, the orders for the months of November 2005 and December 2005 were set aside and the matter was remitted back to the Assessing Authority to examine the issue of input tax rebate on capital goods with reference to filing of Form No.170 in the office of LVO-380 and issuance of Form VAT-175 by the said LVO as per Section 12 of the Act as the said information is not obtained by the assessee from the office of LVO-380. Accordingly, the appeals in STA Nos.577/2007 and 95 to 100/2008 were allowed by setting aside the order of the lower authorities. Appeals in STA Nos.101 and 102/2008 for the months of November 2005 and December 2005 were allowed by setting aside the order of both the authorities below and the matter was remitted back to the assessing authority to pass fresh orders as mentioned in the body of the order and thereafter to revise demand notice. Aggrieved by these orders, the Revenue has filed these revision pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he would be entitled to rebate and, therefore, he submits that no case for interference is made out. 7. These revision petitions came to be admitted on 09.10.2012 to consider the following question of law: "Whether the Karnataka Appellate Tribunal is justified in holding that Section 11A of the Act is not applicable to the facts and circumstances of the case? However, after hearing the parties, by consent, the substantial questions of law are re-framed and they are as under:- (1). To be eligible for input tax rebate, whether tax payable on consumables used in the job work cannot be taken into consideration in arriving at the net tax payable? (2). Whether the assessee is entitled to deduction of input tax in respect of the capital goods in terms of Section 12 of the Act in view of entry 3 of the Fifth Schedule of the Act? (3). Whether the benefit of input tax rebate is not available under Section 11(5) of the Act in respect of the goods which are despatched outside the State or sold outside the State? 8. Substantial Question No.1 The facts are not in dispute. The assessee carries on the business of manufacture of cast iron castings. The assessee also accepts job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer in the course of his business. The 'input tax' in relation to any registered dealer means the tax collected or payable under the Act on the sale to him of any goods for use in the course of his business. Sub-section 3 defines 'net tax' payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in the period and shall be accounted for and in accordance with provisions of this Act. To be eligible for the benefit of the aforesaid section, the invoice debit note or credit note in relation to the sale should be issued in accordance with Section 29 of the Act. Sub-section (5) provides that if the input tax deductible by a dealer exceeds output tax payable by him, the excess amount shall be adjusted or refunded together with interest as may be prescribed. The benefit of tax rebate is subject to the restriction specified in Sections 11, 12, 14, 17 and 18 of the Act. Section 11 deals with input tax restriction. Now, from the wordings of the aforesaid provision, it is clear that the output tax is calculated on the basis of taxable turnover on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns:- (a) Input tax shall not be deducted in calculating the net tax payable, in respect of:- (1) tax paid on purchases attributable to sale or manufacture or processing or packing or storage of exempted goods exempted under Section 5, except when such goods are sold in the course of export out of the territory of India; (2) tax paid on goods as specified in the Fifth Schedule subject to such conditions as may be specified, purchased and put to use for purposes other than for:- (i) resale; or (ii) manufacture or any other process of other goods for sale. (3) tax paid on purchase of goods as may be notified by the Government or the Commissioner subject to such conditions as may be specified. (4) tax paid on purchase of capital goods other than those falling under clause (2) or (3), except as provided in Section 12. (5) tax paid on purchase of goods, that are despatched outside the State or used as inputs in the manufacture, processing or packing of other taxable goods despatched to a place outside the State, other than as a direct result of sale or purchase in the course of inter-State trade or commerce except as provided in Section 14. (6) tax paid on purchases attributable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lephones, fax machines, duplicating machines, photocopiers and scanners, parts and accessories thereof, other than those for use in the manufacture, processing, packing or storing of goods for sale and those for use in computing, issuing tax invoice or sale bills, security and storing information." A reading of the aforesaid provision makes it clear that it gives effect to both Section 11(3) as well as Section 12 of the Act. All electrical or electronic goods and appliances including air conditioners, air coolers, telephones, fax machines, duplicating machines, photocopiers and scanners, parts and accessories thereof, when purchased the input tax paid thereon shall not be deducted in calculating the net tax payable in view of Section 11(a)(3). However, by virtue of Section 12 of the Act, if these goods are used in the manufacture, processing, packing or storing of goods for sale and those for use in computing, issue of tax invoice or sale bills security and storing information, then the input tax paid is eligible for deduction in calculating the net tax payable. Therefore, it is purely a question of fact. The benefit of tax deduction is dependent on the user for which these goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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