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2021 (7) TMI 345 - KARNATAKA HIGH COURTInput Tax Credit - denial of credit capital goods of the unit -2 on the ground that credit cannot be availed before the commencement of commercial production as per Section 12(2) of the KVAT Act - sale of taxable goods or commencement of commercial production - HELD THAT:- It is well settled rule of statutory interpretation in relation to the taxing statute that the subject is not to be taxed unless the words of the taxing statute unambiguously impose tax on him. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible. It is equally well settled legal proposition that the word 'or' is normally disjunctive and the word 'and' is normally conjunctive. It is well settled rule of statutory interpretation that where the provision is clear unambiguous, the word 'or' cannot be read as 'and' and the expression 'or' is disjunctive. The deduction of input tax has to be allowed on fulfillment of one of the conditions namely (1) after commencement of commercial production, (2) sale of taxable goods and (3) sale of any goods in the course of export out of the territory of India by the registered dealer. Rule 133 of the Rules provides for deduction of input tax subject to the conditions mentioned therein. It is pertinent to note that none of the conditions prescribed in Rule 133 provide that each unit of the petitioner has to be an independent unit to avail of the benefit of input tax. There is no element of any mens rea that the petitioner had the intention to evade tax. The petitioner had paid taxes according to the information furnished in the return and therefore, it should not have been penalized subsequently after the assessment proceedings are finalized and the amount of tax is determined. It is well settled in law that penalty cannot be imposed merely because it is lawful to do so. The substantial questions of law are answered in favour of the petitioner and against the respondent.
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