Input tax credit on embedded storage tank materials upheld where the silo qualifies as capital goods used in manufacture.

Section 2(f) of the U.P. Value Added Tax Act, 2008 treats plant, machinery, equipment, apparatus, tools, appliances and storage tanks as capital goods, and it does not require them to be movable. On that basis, MS sheets used to construct a silo storage tank embedded in earth were held to qualify for input tax credit because the silo functioned as a storage tank used in manufacture. The movable-versus-immovable distinction was not treated as a statutory bar where the item was used in the manufacturing process. The assessee's entitlement to input tax credit was upheld.

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Issues: Whether MS sheets used in construction of silos storage tanks embedded to earth qualify as capital goods for the purpose of input tax credit under the U.P. Value Added Tax Act, 2008.

Analysis: The definition of capital goods in Section 2(f) of the U.P. Value Added Tax Act, 2008 is broad and expressly includes plant, machinery, equipment, apparatus, tools, appliances and storage tank. The provision does not impose any requirement that such capital goods must be movable. The distinction between movable and immovable property, though relevant in other contexts, is not a statutory limitation here. The Court also relied on the liberal construction adopted in analogous credit provisions, where items used in manufacture were treated as eligible notwithstanding their embedded nature, so long as they were used in the manufacturing process.

Conclusion: The silo, being a storage tank used in manufacture, falls within capital goods and the assessee was entitled to input tax credit on the MS sheets used in its construction.

Final Conclusion: The revision failed and the Tribunal's view allowing input tax credit was sustained.

Ratio Decidendi: Where the statutory definition of capital goods expressly includes plant and storage tank, eligibility for input tax credit cannot be denied merely because the item is embedded in earth or is not movable, if it is used in manufacture or processing of goods for sale.

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