STATE OF KERALA Vs. AMBUJA CEMENTS LTD.

JUDGEMENT

(1.) An interesting question of law arises in these Tax Revision Cases; "whether the 'Silos' erected by the assessee along with its connected machineries, which is made up of 'steel and cement' could be treated as a civil structure, there by making the expenditure incurred for its erection not eligible for input tax credit, as per SRO 324/2005 promulgated under Sec. 2 (x) of the Kerala Value Added Tax Act, 2003 ('the KVAT Act' for short)".

(2.) The state is in revision against a common order of the Kerala Value Added Tax Appellate Tribunal, Additional Bench, Ernakulam in TA (VAT) Nos.1239 and 1240 of 2011, dated 04-02- 2016.

(3.) Brief facts relevant are as follows. The respondent/assessee claimed input tax credit with respect to the value of capital goods, in the assessment years 2007-2008 and 2008-2009, amounting to Rs.14,80,071.00 and Rs.41,84,831.00 respectively, by producing supporting evidence of purchase invoices. But the Assessing Authority disallowed the claim on finding that, the 'civil structure' and 'immovables' are exempted from the definition of 'capital goods', defined under Sec. 2 (x), by virtue of SRO 324/2005, which contains a negative list of capital goods. The Assessing Authority also found that, the purchases are relating to 'steel and cement', which are 'building materials' specifically included in the negative list. The assessee took up the matter in appeal before the Deputy Commissioner (Appeals), Commercial Taxes, Ernakulam. Out of the 9 items of capital goods with respect to which input tax credit was claimed, the first appellate authority had allowed credit with respect to two items. With respect to the remaining 7 items it was found that, those are building materials, factories, civil structures and immovable goods coming within the negative list in SRO 324/2005. Hence the claim for input tax credit was declined with respect to those items.