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2014 (9) TMI 141 - HC - VAT and Sales TaxDenial of input tax credit - Whether the appellants-assessees, who are engaged in growing of tea/coffee plants and so also in manufacturing of tea/coffee as marketable commodity are entitled to take tax credit of inputs such as fertilizers, chemicals, pesticides, agricultural implements etc., used in the process of its growing/cultivation - Held that:- tea plantation and coffee plantation are agricultural/horticultural activities and that it would not be correct to say that tea and coffee are either not agricultural/horticultural produce or its cultivation does not amount to agricultural activity. In fact, both are true. But, for the purpose of this Act agricultural produce namely “tea”, once made fit for consumption, stand excluded from being agricultural produce. A bare look at the definition of ‘business’, shows that the legislature has recognized the word ‘business’, wider than the words ‘trade, commerce, or manufacture etc.’. Any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture or adventure or concern is also business irrespective of the fact whether or not it makes any profit. The definition of business though has brought within its purview any trade, commerce, manufacture or any adventure or concern or any transaction in connection therewith, in our opinion, would not either directly or indirectly include agriculture/horticulture or agricultural/horticultural activity. From bare perusal of the provisions contained in Section 10 read with definition of ‘input’ and the definition of ‘business’, it appears to us that unless agriculture/horticulture or agricultural/horticultural activity is held to be a ‘business’, an assessee, such as, the assessees in the present case, is not entitled for input tax credit. The basic requirement to seek input tax credit on purchases of goods, such as fertilizers, chemicals, pesticides, etc. is that they are purchased by a dealer “in the course of his business” for resale or for use in the manufacture or processing or packing or sorting of other goods or any other use in business. The agriculture/horticulture or agricultural/horticultural activity or the business as contemplated by the relevant definitions, it is clear that the word ‘business’ as occur in Sub-section (6) of Section 2 is independent and therefore, input tax credit on the purchases such as fertilizers, chemicals, pesticides etc. used in agricultural/horticultural activity cannot be granted. Decided against assessee.
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