Input Vat Credit, VAT + CST

[Dwarakanath sriknatiah]

Is there any case laws with regard to inputvat credit on purchases on fertlisers used in  growing coffee and 

tea plantations? ours is a company which own coffee estates and grows coffee & tea on our estates. we are registered dealer under karnataka vat .

Dwarakanath

Posts / Replies

[Pradeep Khatri]

Dear Dwarkanath,

Your query is quite interesting and needed lots of brain storming in our Tax Research Team.  We have gone through the KVAT provisions in this regard to solve this query.

In our opinion growing crops attached to or forming part of land does not come under the definition of goods as mentioned in the Section 2 (15) of the KVAT Act,2003.  Therefore, In our opinion, you would not be eligible to avail the Input Tax Credit on Input Used in forGrowing the Crops.

Further, please read the Section 10, 11, 12 and 14 of the KVAT Act read with Rules made thereunder for better clarification on this aspect.

If required, you may also seek clarification from the Commissioner of the KVAT Department on payment of nominal fees under Section 60 of the KVAT Act,2003.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)

[Dwarakanath sriknatiah]

Dear Sir,

Thank you for your reply. You any clarification souhgt from Commissioner will be always pro-revenue.

but No where  in the act says input vat on fertilisers is not eligible. the revenue contention is that fertilisers are used as agricultural activity not manufacturing activity, They have divided this aspect under two stages

goods purchased for agricultural activity is not eligible for input vat credit and

goods purchased for manufacturing activity is eligible for input vat credit. Our contetion is that we are dealer under KVAT and the fertlisers purchased is used in course of business;

if there is any case with regard to thism pl let me know

thanks onceagain

dwarakanath

[braja raut]

Dear All

Few points I want clarify in the above issue.

1 Material sold abd duty paid on tranction valies

2.Same material returned and cred taken basiss of the invoice received

3.When re process and sold  duty will be paid on transction value which is should be more than cost of  the product.

In case transction value is less than cost of the product, then diffrential duty will be paid on transaction value and cost of the product by adding 10 percent extra on  the cost of the product in order to avoid dispute in future.

[Pradeep Khatri]

Dear Dwarakanath,

We are appended below relevant and recent judgment of the Hon'ble Karnataka High Court which endorses our opinion that Companies, who are engaged in growing of tea/coffee plants and so also in manufacturing of tea/coffee as marketable commodity, are not entitled to take credit of inputs such as fertilizers, pesticides, fungicides, agricultural implements, etc. used in the process of its growing/cultivation.

We hope that you would appreciate our teams' understanding in this matter.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

 

2014 (9) TMI 141 - KARNATAKA HIGH COURT

M/s BALANOOR PLANTATIONS AND INDUSTRIES LTD AND OTHERS Versus STATE OF KARNATAKA AND OTHERS