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25 May 2017

ITC on goods used in construction of silos, available

Allahabad High Court has upheld the view of the Tribunal that input tax credit on MS Sheets utilized for construction of silo is available.

The Department had contended that ‘capital goods’, as defined under Section 2(f) of the Uttar Pradesh Value Added Tax Act, 2008, are goods that are movable in nature, and since silo is a storage tank embedded to earth, as such, it cannot be included within the definition of ‘capital goods’.

The Court noted in the case of Commissioner v. Ambuja Cement Ltd. that the definition of ‘capital goods’ covered plant, machine, machinery, equipment apparatus and tools or appliances and electrical installation, which are used for manufacture or processing of any goods for sale by a dealer, and held that mere fact that machine, machinery, etc., are generally understood to be movable property, would not mean that plant also has to necessarily be treated as movable property only.

The Court observed that there was no rationale to import the concept of movable or immovable goods while interpreting Section 2(f) of UP VAT, when the provision does not say so.

Decision of the Apex Court in Jawahar Mills Ltd. [2001-VIL-02-SC_CE] which was followed in Rajasthan Spinning and Weaving Mills Ltd. [2010-VIL-05-SC-CE], and the decision of Karnataka High Court in SLR Steels Ltd. [2011-VIL-119-KAR-CE], was also noted by the Court in this regard. The revision petitions of the Department were hence rejected.