Capital goods concessional tax for industrial compressors survives distributor sales where ultimate industrial use remains unchanged.

Industrial air compressors meant for ultimate industrial use were treated as capital goods eligible for concessional tax even when sold through distributors, because the rate did not change merely on the channel of sale; the concessional claim was therefore required to be reconsidered. The assessment of input tax credit reversal for 2011-2012 also required fresh examination in light of available 'C' declaration forms and the later Advance Ruling Authority clarification, with an opportunity for the assessee to produce records. The assessment orders were set aside and the matters remitted for fresh decision after hearing the assessee and considering the relevant materials.

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Issues: (i) whether industrial air compressors manufactured by the petitioner retained the character of capital goods entitled to concessional tax when sold through distributors for ultimate industrial use; (ii) whether the assessment concerning reversal of input tax credit for the assessment year 2011-2012 required reconsideration in the light of available 'C' declaration forms and the subsequent clarification issued by the Advance Ruling Authority.

Issue (i): whether industrial air compressors manufactured by the petitioner retained the character of capital goods entitled to concessional tax when sold through distributors for ultimate industrial use.

Analysis: The relevant entry under the Tamil Nadu Value Added Tax Act, 2006 was treated as extending concessional treatment to capital goods used in industry. The subsequent clarification of the Advance Ruling Authority on identical industrial air compressors was taken as persuasive support that the rate of tax does not change merely because the goods are sold through distributors or dealers, so long as their ultimate use remains industrial.

Conclusion: The issue was answered in favour of the petitioner, and the concessional rate claim was required to be considered afresh.

Issue (ii): whether the assessment concerning reversal of input tax credit for the assessment year 2011-2012 required reconsideration in the light of available 'C' declaration forms and the subsequent clarification issued by the Advance Ruling Authority.

Analysis: The petitioner asserted that the 'C' declaration forms were available after finalisation of the assessment under the CST regime and could be produced if an opportunity was granted. The Court accepted that the matter required fresh examination by the assessing authority along with the later clarification of the Advance Ruling Authority and the records to be produced by the petitioner.

Conclusion: The issue was answered in favour of the petitioner and remitted for reconsideration.

Final Conclusion: The assessment orders were set aside and the matters were sent back for a fresh decision after hearing the petitioner and considering the relevant materials and the Advance Ruling Authority's clarification.

Ratio Decidendi: Goods meant for ultimate industrial use may continue to attract concessional tax as capital goods even when marketed through distributors, and a later authoritative clarification on identical goods must be considered in reassessment.

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