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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether input tax credit was admissible on the machinery items purchased by the assessee under the Haryana Value Added Tax Act, 2003, having regard to the definition of capital goods, the scheme of input tax, and Schedule E.
Analysis: The purchased articles were found to be parts of machinery used in the manufacturing process and not goods for construction of building or infrastructure, despite the vague findings recorded by the authorities below. The definitions of capital goods, input tax and tax invoice, read with Section 8 and Schedule E, showed that input tax credit is denied only where the goods fall within the specified nil-credit situations. The goods did not fall under the special exclusions in Serial Nos. 1 and 2 of Schedule E. Entry 5 was general in nature and the conditions in its column 3 were not attracted on the facts found. The first proviso to Section 8(1) also preserved pro rata credit where only partial use in the disqualifying circumstances is shown.
Conclusion: Input tax credit was admissible to the assessee on the goods purchased, subject to the statutory conditions and pro rata principles under Section 8(1) and Schedule E.
Ratio Decidendi: Machinery parts used in manufacture are not denied input tax credit unless they squarely fall within the disqualifying categories in Schedule E, and the credit scheme under Section 8 must be applied on the facts of actual use.
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