Composition scheme eligibility preserved where inter-State purchase of machinery for business use was not treated as stock-in-trade.

Machinery purchased for use in a stone-crushing business, rather than for resale or ordinary trading, is capital equipment and not stock-in-trade merely because it was procured from outside the State through inter-State purchase using C-Form. On that basis, composition eligibility under the Karnataka Value Added Tax Act could not be denied solely because the business acquired such machinery inter-State. The respondent was therefore entitled to pay tax under the composition scheme, and the revision petition failed while the Tribunal's order in favour of the assessee was sustained.

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Issues: Whether the respondent was entitled to pay tax under the composition scheme under Section 15(1)(d) of the Karnataka Value Added Tax Act, 2003 despite purchasing stone-crushing machinery from outside the State for use in its business.

Analysis: The respondent was engaged in stone crushing and had purchased machinery from outside the State using C-Form. The dispute turned on whether such machinery could be treated as goods in stock for the business so as to attract denial of composition. The Court accepted that machinery acquired for use in the business was capital equipment and not stock-in-trade. It also agreed with the view that composition could not be denied merely because the goods were purchased inter-State, where the item was used as machinery for the business and not dealt with in the ordinary course of trade.

Conclusion: The respondent was eligible to pay tax under the composition scheme, and the question of law was answered in favour of the assessee and against the Revenue.

Final Conclusion: The revision petition did not succeed, and the order of the Tribunal allowing the respondent's appeals was sustained.

Ratio Decidendi: Machinery purchased for use in the business, and not for resale or ordinary trading, cannot be treated as stock-in-trade merely because it was procured through inter-State purchase; composition eligibility is not defeated on that basis.

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