Input tax credit on standby diesel generator sets for manufacturing plants is available as plant and machinery under Haryana VAT.

A diesel generator set used as a standby source to ensure uninterrupted power supply for a manufacturing unit is treated as part of plant and machinery under the Haryana VAT scheme, so input tax credit is available on tax paid on its purchase. The departmental clarification under Section 56(3) supported this position, and similar factual treatment had already been accepted in another case. The Schedule-E entries relied on by the authorities were held inapplicable because the dealer was not engaged in the business of generation and distribution of power; the disallowance of input tax credit was therefore unsustainable.

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Issues: Whether input tax credit was admissible on purchase of diesel generator sets and their parts used as a standby source of power for a manufacturing unit.

Analysis: The assessee used diesel generator sets to ensure uninterrupted power supply for its manufacturing activity. A departmental clarification issued under Section 56(3) of the Haryana Value Added Tax Act, 2003 stated that when a diesel generating set is used as a standby generator for a manufacturing plant, it forms part of plant and machinery and input tax credit is available on the tax paid on its purchase. The same position had also been accepted in another case involving similar facts. The entries in Schedule-E relied upon by the authorities were held inapplicable to a dealer not engaged in generation and distribution of power as a business of sale of power.

Conclusion: Input tax credit on the diesel generator set was admissible and the disallowance was unsustainable.

Final Conclusion: The appeals succeeded and the assessee was granted the relief of input tax credit on the purchase of diesel generator sets used for running the manufacturing plant.

Ratio Decidendi: A diesel generating set used as a standby source to ensure uninterrupted power supply to a manufacturing plant constitutes part of plant and machinery, and the tax paid on its purchase qualifies for input tax credit under the Haryana VAT scheme when supported by the department's own clarification.

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