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Issues: Whether silos and connected machinery erected by the assessee constituted civil structure or immovable goods falling within the negative list under S.R.O. 324/2005, and whether input tax credit was allowable as capital goods under the Kerala Value Added Tax Act, 2003.
Analysis: Section 11 of the Kerala Value Added Tax Act, 2003 permits input tax credit subject to the statutory restrictions. Under Section 2(x), capital goods include plant, machinery and equipment, but exclude civil structure and immovable goods notified by the Government. S.R.O. 324/2005 places civil structure, immovable goods and certain building materials in the negative list. The machinery items in dispute were found to be functional equipment forming part of the assessee's industrial process, and not building materials or civil structures merely because steel and cement were used in their construction. On the facts found, the silos were part of an integrated plant with a specific industrial function and could not be treated as mere civil structure.
Conclusion: The silos and connected machinery did not fall within the negative list and qualified as capital goods. Input tax credit was admissible, and the revision by the State failed.
Ratio Decidendi: Functional industrial installations that constitute an integral part of plant and machinery do not become civil structure or immovable goods merely because they are constructed using steel and cement; they remain capital goods unless specifically excluded by the notified negative list.
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