INPUT VAT CREDIT FOR PURCHASE OF OXYGEN CYLINDER BY MANUFACTURER

[sathya narayanan]

Dear Sir,

We are Green Enviro Gas manufactures for medical oxygen gas now we have bought capital goods - oxygen cylinders to supply hospitals in chennai the purchase was under VAT now can i tak the vat credit or not???

The quiery is as the cylinder is used only to transport the medical oxygen gas hence vat cannot be utilized is it so???

Please explian.

Thanks and Regards

S.Sathyanarayanan

[Ganeshan Kalyani]

The cylinders are essential in the process of sale. in fact sale is not possible unless you get those cylinders. thus it is an input used in the process of manufacture. The oxygen so manufactured is filled in the cylinder which is when the product is ready for supply. Hence in my view the input credit should be rightly eligible for taking credit.

AI Summary

Input VAT credit eligibility for oxygen cylinder purchases where cylinders are integral inputs enabling manufacture and sale of oxygen. Whether a manufacturer may claim input VAT credit on oxygen cylinders used to contain and transport the finished oxygen to customers. The advisory view is that the cylinders are integral inputs to the manufacture and supply process-without them the product cannot be delivered-so input VAT credit on the cylinder purchases is properly claimable.