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2021 (4) TMI 133 - HC - VAT and Sales TaxRestriction on Input tax credit - job-work - purchase of capital goods which are wholly or partially used in the business of the taxable goods - non-differentiation of difference between the trading goods and capital goods in case of utilizing them for other purposes other than trade - Rule 131 of the KVAT Rules - HELD THAT:- From Sections 12 and 17 of the KVAT Act, it is crystal clear that when the goods are partly used in their business of taxable goods and partly used for any other purpose (other than sale, manufacturing, processing, packing or storing of goods), then the apportionment has to be done keeping in view the formula prescribed under Rule 131 of the KVAT Rules. In the present case, the petitioner has purchased capital goods from local Registered Dealers and claimed the benefit of input tax credit on such purchase. It is an admitted fact that the petitioner has not only used the capital goods for the purpose of manufacturing or processing the taxable goods but also for non taxable transactions, like job work - The procedure to claim the benefit of input tax rebate in respect of local Registered Dealer purchases of capital goods is laid down under Rule 133 of the KVAT Rules. The amended Rule 133 came into force w.e.f., 1.4.2006 and provides that where a registered dealer carries on the business in taxable as well as exempted goods or exempted transactions and taxable transactions, the input tax deduction on capital goods be allowed proportionately, keeping in view the formula laid down under Rule 131 of the KVAT Rules. Rule 133(c) of the KVAT Rules clearly specifies that where the use of capital goods relates, to both the sale of goods in the course of export out of the territory of India or sale of taxable and exempt goods and also to taxable goods that are disposed otherwise than by way of sale or non taxable transactions, the non deductiable element of input tax shall be calculated on the basis of the formula specified under Rule 131 of the KVAT Rules. The orders passed by the authorities and the Tribunal do not warrant any interference as apportionment was rightly done keeping in view the formula provided under Rule 131 of the KVAT Rules - substantial questions of law are answered against the petitioner and in favour of the Revenue - Petition dismissed.
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