Input-tax credit on diesel for captive electricity generation denied because the specific exclusion overrides the general energy-use provision.

Diesel was expressly excluded from input-tax credit under clause (b) of section 13(5) of the Punjab Value Added Tax Act, 2005, unless the taxable person was engaged in selling such products. The broader allowance in clause (i) for goods used in generation, distribution and transmission of electrical energy could not override that specific exclusion. Applying the settled rule that a special provision prevails over a general one, the law was read to deny credit on diesel used for captive generation of electricity. Input-tax credit in such circumstances was therefore not available.

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Issues: Whether input-tax credit was available on diesel used in the generation of electrical energy for captive consumption under the Punjab Value Added Tax Act, 2005.

Analysis: Diesel was specifically excluded from input-tax credit under the express language of clause (b) of section 13(5), unless the taxable person was in the business of selling such products. Clause (i) dealing with goods used in generation, distribution and transmission of electrical energy could not be used to override that specific exclusion. The settled rule that a special provision prevails over a general provision applied, so the general benefit in clause (i) could not displace the specific denial in clause (b).

Conclusion: Input-tax credit on diesel used for captive generation of electricity was not allowable, and the issue was decided against the assessee and in favour of the Revenue.

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