VAT ITC credit of Forklift

[Parth Bhatt]

Dear Experts

Pranams. This is Parth Bhat from Ahmedabad.I am Tax Accountant in a automobile ancilliary manufacturing company.My question is whether forklift used in material handling inside plant can be categorised as "vehicle"? My vat auditor has raised/querry nd disallowed credit. Under Guj VAT definition of Cap Goods is " plant n machinery used for manufacturing taxable goods accounted as fixed asset nt being second hand goods". Plant n machienry phrase is nt defined in act neither many judgements of guj highcourt spot light on intrpretation of plant n machinery in connection with forklift/other material handling equipment. Kindly guide me in this regard.

AI Summary

Input tax credit denial: Forklifts treated as motor vehicles, credit not allowable under VAT vehicle exclusion.
Forklifts used inside a manufacturing plant have been judicially classified as motor vehicles rather than as capital goods or plant and machinery. Because VAT excludes vehicles from input tax credit, input tax credit on forklifts is not allowable. If credit was taken, it must be repaid with interest and possible penalties, subject only to any administrative leniency.