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2024 (6) TMI 384 - HC - VAT and Sales TaxIssues Involved: 1. ITC on normal loss/material loss due to spillage, ground loss, and during transportation. 2. Applicability of Section 19 of the KVAT Act. 3. Confirmation of the order of the audit authority and appellate authority. 4. Interpretation of the terms "lost or destroyed" in Section 19(1) of the KVAT Act. 5. Extension of Section 19(1) to normal loss/material loss. 6. Non-following of judgment under the Central Excise Act. 7. Dissolution of ITC at 0.65% on wastage/loss. 8. Partial allowance of the appeal by the Tribunal. Summary: 1. ITC on Normal Loss/Material Loss: The court considered whether the Tribunal was right in not allowing ITC on normal loss/material loss due to spillage, ground loss, and during transportation. The court upheld the Tribunal's decision, stating that Section 19(1) of the KVAT Act mandates repayment of input tax credit if the goods are not used in the course of business or are lost or destroyed. 2. Applicability of Section 19 of the KVAT Act: The petitioner argued that Section 19 of the KVAT Act is not applicable to their case. However, the court found that Section 19(1) clearly states that input tax deducted becomes repayable if the goods are not used in the course of business or are lost or destroyed. 3. Confirmation of the Order of the Audit Authority and Appellate Authority: The court confirmed the orders of the audit authority and the appellate authority, which had restricted input tax credit due to the loss of Iron ore valued at Rs. 85,08,160/-. 4. Interpretation of "Lost or Destroyed" in Section 19(1): The court held that the terms "lost or destroyed" in Section 19(1) include losses due to spillage, transportation, handling, and moisture. The court emphasized that the provision does not provide any exceptions based on the nature of the business or circumstances. 5. Extension of Section 19(1) to Normal Loss/Material Loss: The court rejected the petitioner's contention that normal loss/material loss should not fall within the scope of "lost or destroyed" as referred to in Section 19(1) of the KVAT Act. 6. Non-following of Judgment under the Central Excise Act: The court noted that the judgments cited by the petitioner under the Central Excise Act and other statutes were not applicable to the present case, as the facts and circumstances were different. 7. Dissolution of ITC at 0.65% on Wastage/Loss: The court found that the authorities had rightly dissolved the ITC at 0.65% on wastage/loss due to spillage, handling, and ground loss, as the Iron ore was not used in the course of business to that extent. 8. Partial Allowance of the Appeal by the Tribunal: The court upheld the Tribunal's decision to partly allow the appeal, confirming that the petitioner was not eligible for input tax credit on the loss in transportation, ground loss, and loss due to moisture. Order: i) The petition is dismissed. ii) The question of law is answered in the affirmative, in favor of the Respondent Authorities and against the Petitioner. iii) No order as to costs.
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