TMI Blog2021 (10) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... of ore from the mining and the transporting the same to the harbor involving different operations is held to be in the manufacture or processing of goods for sale or in mining, the mining tippers purchased by the assessee as capital goods is entitled for input tax credit, denial of the same is unjustifiable. The questions of law answered in favour of the assessee and against the revenue - Appeal allowed - questions of law are answered in favour of the assessee and against the revenue. - S.T.A.No.29/2017 - - - Dated:- 3-9-2021 - HON BLE MRS.JUSTICE S. SUJATHA AND HON BLE MR. JUSTICE RAVI V. HOSMANI APPELLANT (BY SRI GOPAL MUNDHRA, ADV. A/W SRI PARTH PAREKH, ADV. A/W SRI AJAY J. NANDALIKE, ADV.) RESPONDENT (BY SRI K.HEMA KUMAR, AGA.) J U D G M E N T S. SUJATHA, J., This appeal is filed by the assessee under Section 66(1) of the Karnataka Value Added Tax Act, 2003 ( KVAT Act for short) assailing the order dated 26.09.2017 passed in No. ZAC-3/DVG-SMR-7/2017-18 by the Additional Commissioner of Commercial Taxes Revisional Authority, whereby an order passed under Section 64(1) of the KVAT Act by the First Appellate Authority has been set aside rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the respondent was correct and justified in holding that the Mining Tippers purchased by the appellants are not used in the activity of manufacture/processing of goods? 3) Whether the respondent has acted without authority of law and in excess of its jurisdiction in ignoring the decision of the Hon ble Supreme Court in the case of Chowgule and Co. Pvt. Ltd., and Anr. Vs. Union of India [(1981) 47 STC 124 (SC) wherein it has been unequivocally held that the use of machineries for transportation of mined ore is integrally connected to the activity of manufacture or processing of goods? 4) Whether the impugned order is correct and justified in view of the decision of this Hon ble Court in case of Suma Oil Agencies vs. The Additional Commissioner of Commercial Taxes [2014 (79) Kar.L.J. 153]? 5) Whether in the facts and circumstances of the case, the respondent was correct and justified in applying the decision of this Hon ble Court in case of Canara Overseas (supra) which was passed in a different context altogether? 7. Learned counsel for the appellant/assessee submitted that the issue on hand is squarely covered by the judgment of co-ordinate bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t chemical and physical composition and loading of the blended ore into the ship for delivery to the foreign buyers. It will thus be seen that the entire activity of the assessee is broadly divisible into seven different operations, one following upon the other, namely, (i) extraction of ore from the mine; (ii) conveying the ore to the dressing plant; (iii) washing, screening and dressing the ore; (iv) conveying of the ore from the mine site to the river side; (v) transport of the ore from the river side to the harbour by means of barges; (vi) stacking of the ore at the harbour in different stock piles according to its physical and chemical composition, and (vii) blending of the ore from different stock piles with a view to producing ore of the required specifications and loading it into the ship by means of the mechanised ore handling plant. The question is whether goods purchased by the assessee for use in the above operations could be said to be goods purchased for use in the manufacture or processing of goods for sale or in mining . 12. The Hon ble Apex Court in the said case, while considering the question whether the items of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxable goods. Rule 133 of the K.V.A.T. Rules provides that no deduction of input tax shall be allowed where the use of capital goods relates wholly to the sale of exempt goods. Clause (b) of the above Rule provides that where the capital goods used for sale of taxable goods wholly or partly the dealer shall be eligible for rebate on such capital goods. The cumulative reading of the above provisions make it clear that when the dealer purchased the capital goods for the purpose of his business, he is entitled for deduction of input tax under the Act. The language employed in the definition of 'Capital Goods' makes it clear that deduction of input tax shall always be allowed in respect of purchase of capital goods for the use of business wholly or partly for use in the business of taxable goods. Further reading of definition of 'input' makes it very clear that any capital goods purchased by a dealer in the course of his business for re-sale or for use in the manufacture or processing or packing or storing of other goods or any other use in business. 13. In the instant case, the records clearly disclose that the assessee had purchased a canter fitted with the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The additional condition sheet attached to EPCG authorization No.1730000972, dated 30.06.2009 would stipulate as under: (1) The Tippers imported under EPCG Scheme will be registered in the name of Authorization holder for use in mining activities only. (2) The Tippers will be installed and utilized for production related activities within the mining area as declared by authorization holder at the time of submission of application for issuance of EPCG authorization. (3) The Tippers will neither be registered as public vehicles nor transferred (including in the premises of Group Company). (4) Tippers will, therefore, not ply on public roads. In terms of the said conditions, the tippers imported under EPCG scheme purchased by the assessee were required to be used in mining activities only. 18. In terms of Section 11 of the KVAT Act, tax paid on goods as specified in the Fifth Schedule, purchased and put to use for purpose other than, (1) xxx. (2)(ii) manufacture or any other process of other goods for sale shall not be deducted in calculating the net tax payable. In other words, if such tax paid purchased goods are put to resale or manufacture or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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