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2018 (2) TMI 1827 - HC - VAT and Sales TaxInput tax credit - interpretation of statute - meaning of the expression “input including raw material” - “capital goods” used as “Inputs” in manufacturing of taxable goods - Whether in the facts and circumstances of the case, the Hon'ble Tribunal was right in law in holding that Input Tax Credit @ 2% is not required to be reduced on “capital goods” used as “Inputs” in manufacturing of taxable goods? - Notification No.(GHN14) VAT2010S.11(6)(2)/TH dated 29.06.2010. Held that:- In essence and substance “input” is what is put in the final product. Anything which goes into the manufacture of the final product is an “input” but not everything that is used for manufacturing the final product can be termed as “input”, as is sought to be canvassed on behalf of the appellant. In terms of sub-section (5) of section 2 of the GVAT Act, the expression “capital goods” is defined as plant and machinery (other than second hand plant and machinery) meant for use in manufacture of taxable goods and accounted as capital goods in the books of accounts. Insofar as the expression “raw materials” is concerned, the same is defined under sub-section (19) of section 2 of the Act, to mean goods used as ingredient in the manufacture of other goods and includes process materials, consumable stores and material used in the packing of the goods so manufactured but does not include fuels for the purpose of generation of electricity. It is difficult to comprehend as to how the capital goods component would be worked out qua the goods which are sold in the inter-State trade and commerce. In terms of the notification dated 29.06.2010, the input tax credit is required to be reduced when the goods are used as input including raw material in the manufacture of goods. Therefore, insofar as the raw material is concerned, even in its widest terms, it would include material which would be consumed in the manufacture of the final product, and the input tax credit availed in respect thereof would be required to be reduced. It is settled legal position that in a taxing statute, if something cannot be computed, the legislature never intended to tax such item. In the present case, since it would not be possible to compute the input tax credit component of the capital goods in terms of Entry No.2 of the notification, it can be safely presumed that there was no intention on the part of the State Government of including capital goods within the ambit of “input including raw materials. The impugned order passed by the Tribunal do not suffer from any legal infirmity so as to give rise any question of law, much less, a substantial question of law, warranting interference - appeal dismissed.
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