TMI Blog2021 (4) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... t also for non taxable transactions, like job work - The procedure to claim the benefit of input tax rebate in respect of local Registered Dealer purchases of capital goods is laid down under Rule 133 of the KVAT Rules. The amended Rule 133 came into force w.e.f., 1.4.2006 and provides that where a registered dealer carries on the business in taxable as well as exempted goods or exempted transactions and taxable transactions, the input tax deduction on capital goods be allowed proportionately, keeping in view the formula laid down under Rule 131 of the KVAT Rules. Rule 133(c) of the KVAT Rules clearly specifies that where the use of capital goods relates, to both the sale of goods in the course of export out of the territory of India or sale of taxable and exempt goods and also to taxable goods that are disposed otherwise than by way of sale or non taxable transactions, the non deductiable element of input tax shall be calculated on the basis of the formula specified under Rule 131 of the KVAT Rules. The orders passed by the authorities and the Tribunal do not warrant any interference as apportionment was rightly done keeping in view the formula provided under Rule 131 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest was levied under Section 72(2) and Section 36 of the Act. 5. Re-assessment was done under Section 39(1) of the KVAT Act for 12 tax periods from April 2006 to March 2007 and for 12 tax periods from April 2007 to March 2008 vide order dated 30.4.2011 by restricting the input tax credit on capital goods proportionately by adopting the formula prescribed under Rule 131 of the KVAT Rules and thereby disallowing the input tax credit claimed on the job work portion. Not only additional demand was created but also levied penalty under Section 72(2) of the KVAT Act. 6. Against the order passed by the assessing officer dated 30.4.2011, the petitioner preferred appeals before the first appellate authority and the first appellate authority, namely Joint Commissioner of Commercial Taxes affirmed the order passed by the assessing officer vide order dated 5.12.2015. Thereafter, second appeals were preferred before the Karnataka Appellate Tribunal (hereinafter referred to as the Tribunal ) and the Tribunal has dismissed the appeals by order dated 4.1.2018. In the aforesaid factual background, this petition has been preferred raising the following substantial questions of law:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods), in addition to use in the course of his business, apportionment and attribution of input tax deductible between such sales and despatches of goods or such purpose, shall be made in accordance with Rules or by special methods to be approved by the Commissioner or any other authorised person and any input tax deducted in excess shall become repayable forthwith. Rule 133 of KVAT Rules 133. Capital goods scheme.- (1) Deduction of input tax under section 12 shall be subject to the following conditions.- (a) No deduction of input tax shall be allowed where the use of capital goods relates wholly to the sale of exempt goods, other than when such goods are sold in the course of export out of the territory of India. (b) Where there is a change in use of the capital goods from sale of exempt goods or non-taxable transactions to sale of taxable goods wholly or partially, within twelve months from the date of its purchase, the dealer shall be eligible for rebate on such capital goods. (c) Where the use of capital goods relates, to both the sale of goods in the course of export out of the territory of India or sale of taxable and exempt goods and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business of taxable goods and hence, input tax credit is also available for job work and that since job work is out of the purview of the provisions of the KVAT Act and Rules, the same is not covered under Section 17 of the KVAT Act and hence Rule 131 cannot be applied. 13. We have carefully perused the findings arrived at by the Tribunal in respect of the aforesaid issue. By a bare reading of Sections 12 and 17 of the KVAT Act, it is crystal clear that when the goods are partly used in their business of taxable goods and partly used for any other purpose (other than sale, manufacturing, processing, packing or storing of goods), then the apportionment has to be done keeping in view the formula prescribed under Rule 131 of the KVAT Rules. 14. In the present case, the petitioner has purchased capital goods from local Registered Dealers and claimed the benefit of input tax credit on such purchase. It is an admitted fact that the petitioner has not only used the capital goods for the purpose of manufacturing or processing the taxable goods but also for non taxable transactions, like job work. The claim of input tax credit on local Registered Dealers purchases of capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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