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2018 (12) TMI 350 - HC - VAT and Sales TaxInput tax credit - raw material purchased for generation of electricity - electricity is included as an exempted item under Schedule I of the Kerala Value Added Tax Act - prohibition u/s 11(5) under KVAT Act - Held that:- In the present case, the said prohibition would have been applicable, if the manufactured electricity was sold by the assessee, on which there is no levy of tax. As far as the assessee is concerned, the entire electricity generated is captively consumed for manufacturing purposes and for electrifying the factory premises. Hence the proportion of the raw material employed in the production of electricity, used in the manufacturing process of newsprint, is an input used in the manufacture of the final product of the assessee being newsprint, which is assessable to tax under the KVAT Act. The assessee is entitled to claim input tax credit. In this context, it is also to be noticed that electricity though included under the First Schedule is specifically excluded from the definition of “goods” as available under Section 2(xx) of the KVAT Act. The assessee would also be liable to produce sufficient documents to prove the payment of tax on purchase of raw material for which input tax credit is claimed. The assessee should also produce sufficient materials before the Assessing Officer to segregate the percentage of electricity used for manufacturing purpose and for illuminating purpose. If the assessee is not able to produce such material to the satisfaction of the Assessing Officer, then on best judgment, the Assessing Officer could determine the proportion of the electricity used in the manufacturing process and in illuminating the factory premises. The input tax credit can be allowed only insofar as the raw materials used for production of electricity, employed in the manufacturing process. Decided against Revenue.
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