Works contract VAT credit remains capped at 75% for workshop repair goods despite sale treatment of spare parts and lubricants.

Goods used in the execution of a works contract may still be treated as a sale for VAT purposes, even where their value is shown separately, but that characterisation does not expand the input tax credit available under the statute. For spare parts and lubricants used in two-wheeler servicing and repair work, the court applied the specific works contract credit restriction and held that the dealer's entitlement remained confined to 75%, not 100%. The fact that the goods were capable of being treated as sales did not override the express statutory cap governing workshop repair transactions.

---

---

Issues: Whether spare parts and lubricants used in servicing and repairing two-wheelers in the petitioner's workshop, though treated as a sale for VAT purposes, entitled the dealer to input tax credit at 100% or whether the credit was restricted to 75% under the VAT framework.

Analysis: Goods supplied or used in the execution of a works contract are deemed to be transferred in the course of sale, even where the value of the goods is shown separately. On that footing, spare parts and lubricants used in repair work were capable of being treated as sale for the purposes of the Act. However, the taxing scheme for works contracts specifically limited input tax credit where tax was paid under the works contract provision. The Court held that the mere fact that the transaction partook of the character of sale did not enlarge the statutory credit entitlement beyond the express restriction applicable to workshop transactions. Since the petitioner's goods were used in works contract repairs, the statutory limitation to 75% governed the claim.

Conclusion: The petitioner was not entitled to 100% input tax credit on spare parts and lubricants used in workshop repairs, and the restriction to 75% was upheld.

Final Conclusion: The assessment and appellate orders were sustained because the statutory credit entitlement for goods used in repair works remained confined to the reduced credit prescribed for works contracts.

Ratio Decidendi: Where goods are used in the execution of a works contract, the transaction may still be treated as a sale for VAT purposes, but input tax credit remains confined to the statutory limit expressly fixed for works contract transactions.

---