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2016 (10) TMI 374

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..... goods which are not forming part of the goods mentioned at Sr. Nos. 1 and 2 will form part of this entry. If the goods purchased by the appellant were not in the category of capital goods, the same will fall in the goods mentioned at Sr. No. 5. Considering the conditions as provided in column no.3, the appellant is not in the business of telecommunication, mining or generation and distribution of electricity, hence, the goods could not possibly be used for that purpose. The goods have not been exported out of State or disposed of otherwise than by way of sale. Clause (iii) in the circumstances mentioned in Column 5 provides that if the goods have been used in manufacture or packing of exempted goods then the benefit of input tax credit is not available. Conditions laid down in Clauses (iv) and (v), are also not applicable in the case in hand as neither the goods are in stock nor those have been sold to Canteen Store Department. First proviso to Section 8(1) of the Act provides that if the goods so purchased in the State are used or disposed of partly in the circumstance mentioned in Schedule “E' and partly otherwise the input tax credit in respect of such goods shall be computed on .....

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..... rt. 3. Learned counsel for the appellant submitted that Section 8 the the Act provides for determination of Input Tax Credit. In terms of the aforesaid section, input tax in respect of any goods purchased by a VAT dealer shall be the amount of tax paid to the State on the sale of such goods to him, but shall not include tax paid in respect of goods specified in Schedule 'E' used or disposed of in the circumstances mentioned against such goods. Schedule 'E' appended to the Act provides for a list of goods where input tax is 'nil'. Serial No. 1 in the list will not be relevant as it provides for Petroleum products and natural gas. Serial No. 2 is also not relevant as it contains capital goods when intended to be used mainly in the manufacture of exempted goods or in the telecommunications, energy or mining or generation and distribution of electric energy or any other form of power or when it forms part of gross block on the date of cancellation of registration certificate. Items at Serial Nos. 3 and 4 were omitted with effect from 1.7.2005, hence, will not be relevant for the assessment year in question. Item at Serial No. 5 provides for all goods except t .....

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..... 7. Heard learned counsel for the parties and perused the paper book. 8. The relevant provisions of the Act are reproduced hereunder:- 2(1)(g) capital goods means plant, machinery, dies, tools and equipment purchased for use in the State in manufacture or processing of goods for sale or in the telecommunication network or in mining or in the generation or distribution of electricity or other form of power, provided such purchase is capitalised; xxx xxx xx 2(1)(w) input tax means the amount of tax paid to the State in respect of goods sold to a VAT dealer, which such dealer is allowed to take credit of as payment of tax by him, calculated in accordance with the provisions of section 8; xxx xxx xx 2(1)(zl) tax invoice means an invoice required to be issued according to the provisions of sub-section (2) of section 28 by a VAT dealer for sale of taxable goods to another VAT dealer for resale by him or for use by him in manufacture or processing of goods for sale, and which entitles him to claim input tax in accordance with the provisions of section 8; xxx xxx xx Section 8. (1) Input tax in respect of any goods purchased by a VAT dealer shall be t .....

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..... 2 3 1 Petroleum products and natural gas (i) When used as fuel (ii) When exported out of State. 2 Capital goods (i) When intended to be used mainly in the manufacture of exempted goods or in the telecommunications network or mining or the generation and distribution of electric energy or other form of power; or (ii) When forming part of gross block on the date of cancellation of the registration certificate. 3 (x x x) 4 (x x x) 5 All goods except those mentioned at Serial Nos. 1 and 2 (i) When used telecommunications network, in mining, or the generation and distribution of electricity or other form of power; (ii) When exported out of State or disposed of otherwise than by sale; (iii) When used in the manufacture or packing of exempted goods except when such goods are sold in the course of export of goods out of the territory of India; (iv) When used in manufacture or packing of taxable goods which are .....

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..... aid in respect of goods specified in Schedule 'E' used or disposed of in the circumstances mentioned against such goods. Schedule-'E' at the relevant time provided for three different categories of goods wherein in the circumstances mentioned in column 3 thereof the input tax credit was 'nil'. 12. The goods purchased by the appellant do not fall in the categories described at Sr. Nos. 1 and 2. 13. Entry 5 in Schedule-'E' is general in nature. All goods which are not forming part of the goods mentioned at Sr. Nos. 1 and 2 will form part of this entry. If the goods purchased by the appellant were not in the category of capital goods, the same will fall in the goods mentioned at Sr. No. 5. Considering the conditions as provided in column no.3, the appellant is not in the business of telecommunication, mining or generation and distribution of electricity, hence, the goods could not possibly be used for that purpose. The goods have not been exported out of State or disposed of otherwise than by way of sale. Clause (iii) in the circumstances mentioned in Column 5 provides that if the goods have been used in manufacture or packing of exempted goods th .....

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