Input tax credit on pet coke for captive power generation was upheld in full under the Punjab VAT Act.

Input tax credit under the Punjab VAT Act was held admissible in full on pet coke used for generation of electrical energy for captive consumption. Section 13(1) allows credit on taxable purchases used in the course of business, while Section 13(4) imposes only a limited restriction on specified fuels and lubricants, and Section 13(5)(i) otherwise excludes goods used in generation of electricity but expressly restores credit for captive consumption subject to Section 13(4). As pet coke was not among the specifically excluded goods, the provisions were read harmoniously and credit could not be denied by an expansive reading of the restriction.

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Issues: Whether input tax credit is admissible on pet coke purchased and used for generation of electrical energy for captive consumption under the Punjab Value Added Tax Act, 2005.

Analysis: Section 13(1) grants input tax credit on taxable purchases used in the course of business, while Section 13(4) restricts credit for specified fuels and lubricants to the extent of tax exceeding five per cent when used in production or captive power generation. Section 13(5)(i) creates a general exclusion for goods used in generation, distribution and transmission of electrical energy, but expressly restores credit where such use is for captive consumption, subject to Section 13(4). Pet coke was neither one of the goods specifically listed in Section 13(4) nor among the disqualifying goods in Section 13(5)(b), and the provisions had to be read harmoniously to give effect to the allowance created for captive consumption.

Conclusion: Input tax credit on pet coke used for generation of power for captive consumption is allowable in full, and the issue is answered in favour of the assessee.

Ratio Decidendi: Where goods used for captive generation of electricity are not specifically excluded by the negative-list provisions and are not confined by the limited restriction in the special credit conditions, input tax credit cannot be denied by reading the restriction provision broadly against the express allowance for captive consumption.

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