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TMI Blog2017 (8) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... n: "Did the Tribunal err in law in holding that the Appellant/Assessee was not entitled to claim exemption for the subject goods by virtue of Section 6 (3) in the circumstances of the case." 3. The facts in brief are that the Appellant is engaged in trading of new cars and their spares. A notice of default of tax and interest under Section 32 of the DVAT Act in respect of the FY 2010-11 was issued by the Value Added Tax Officer ('VATO'), Ward No. 204, on 2nd April 2012 for the period October 2010-11 creating a demand of Rs. 1,77,266. 4. In the said notice it was noted that the Appellant had sold a car on 13th October 2010 for the period October 2010-11 in the sum of Rs. 10,51,000, which had been used by it as a demo car. It was further noted that the Appellant had not paid any VAT on this sale on the ground that the sale was covered under Section 6 (3) of the DVAT Act. The notice noted the contention of the Appellant that 'Capital Goods' under Section 2(1) (f) of the DVAT Act included plant, machinery and equipment used, directly or indirectly, in the process of trade or manufacturing and that the demo car was in the nature of a plant, machinery and equipment which was directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the business by the Appellant and later very car was used as demo car subject to resale in an unmodified form. Therefore, the said demo car ceased to be treated as non-creditable goods and as such the Appellant was within his rights to claim ITC. In such a scenario, if the ITC was not claimed in respect of such a capital goods/goods/capital assets under Section 9 of the DVAT Act, no benefit thereof would enure to the Appellant to seek exemption of tax of such an item to which he could otherwise claim tax credit. It was further held that no interference was called for with the order of penalty as well. 9. After the order was passed by the AT on 28th August 2014, this Court delivered a judgment dated 23rd December 2014, in a batch of appeals, of which the lead case was ST. APPL. No. 35 of 2014 (Anand Decors v. Commissioner of Trade and Taxes, New Delhi). There, the Appellants were registered dealers under the DVAT and were engaged in various businesses other than trading of cars. Such Appellants had sold cars that had been purchased by them in their own names after paying VAT. They had not availed/been granted ITC of the VAT paid on the motor vehicles at the time of purchase. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court in Anand Decors v. Commissioner of Trade and Taxes, New Delhi (supra). The Appellant cited previous instances where the AT had rectified its orders in view of a subsequent decision of this Court or the Supreme Court. Nevertheless, by the impugned order dated 29th July 2015, the AT rejected the rectification application primarily on the ground that when it delivered its judgment dated 28th August 2014, the decision of this Court in Anand Decors v. Commissioner of Trade and Taxes, New Delhi (supra) had not yet been pronounced. 13. Thereafter the present appeal was filed. On 27th January 2016, the following order was passed by the Court: "5. Mr Gautam Narayan, Additional Standing Counsel appearing for the Respondent sought to distinguish the judgment of this Court dated 23rd December, 2014 in ST. APPL. 35/2014 (Anand Decors v. Commissioner of Trade & Taxes, New Delhi) in its applicability to the facts of the present case. His contention was that the demo car was sold by the Appellant could not be considered as 'capital goods' within the meaning of Section 2(f) of the Delhi Value Added Tax Act, 2004. 6. On the other hand, Mr. Babbar, learned counsel for the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods. There was a distinction between capital goods and capital assets as noted in the Anand Decors (supra). Secondly, he pointed out that at least in one instance the car purportedly purchased for use of the Appellant for its business was sold within one month thereafter at a premium. Therefore, it cannot be accepted that what was being sold were the capital goods or assets of the Appellant. Referring to the affidavit dated 29th March 2016 Mr Narayan pointed out that as many as 9 cars purportedly used as demo cars were sold between 28th February 2010 and 22nd March 2010. In 2010-11, 12 cars were bought in the Appellant's name between 5th April 2010 and 30th November 2010 of which one was sold. 17. Referring to the short affidavit of the Respondent, Mr. Narayan pointed out that in the returns filed by the Appellant for 2010-11 in the column R 6.1 the 'capital goods' figure was mentioned as zero. Further under the column R 6.2 (9) titled "exempted purchases‟, there was no specific mention of purchase of capital goods after paying VAT. The failure by the Appellant to disclose the full and correct particulars in the above columns disentitled it to relief under Section 6 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icance for the purpose of availability of the benefit under Section 6 (3) of the DVAT Act. As long as the four conditions spelt out in Anand Decor (supra) are satisfied, the Assessee would be entitled to the benefit under Section 6 (3) of the DVAT Act. In the considered view of this Court, the Appellant satisfies each of those four conditions. The Department has not been able to show that any of those conditions have not been met. The Appellant deals in the business of selling new cars. For that purpose it uses the cars purchased in its own name as demo cars. This is perfectly plausible. Such cars are the capital goods of the Appellant and are treated as such. The capital goods have not been exclusively used for making sale of non-taxable goods. Lastly, no ITC is claimed by the Appellant in respect of the VAT paid by it at the time of purchase of the cars. 23. The fact that in 2010-11, 9 cars were sold whereas one demo car purchased on 22nd March 2010 was sold subsequently on 31st October 2010 after using it for about seven months again will not per se disentitle the Appellant for the benefit under Section 6 (3) of the DVAT Act. 24. The Court also does not see any significance be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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