Consumables are eligible for Input Tax Credit in Orissa
Orissa Value Added Tax Act, 2004 allows the dealer to claim input tax credit on the following purchases:
a) goods purchased for resale
b) goods purchased for use in works contract
c) goods purchased for use in processing or manufacture of goods, where such purchases directly go into composition of the finished goods, and
d) consumables purchased, where such consumables are directly used in such manufacture or processing.
In Reliance Industries Ltd v Asst Commissioner of Sales Tax and Others, the Orissa High Court decided the following questions:
1) Whether exhaustion of statutory remedy can be a bar in this case for this court to exercise its jurisdiction under article 226 of the Constitution?
Following the decision of the Supreme Court in Calcutta Discount Co Ltd v Income Tax Officer, Companies District – 1, Calcutta [1961] 41 ITR 191, the Orissa High Court held that the present writ petition is maintainable even without exhaustion of the statutory remedy.
2) Whether exercising power under section 30 of the OVAT Act, 2004 the ACST assumes jurisdiction to make assessment?
The Court held that the registering authority did not have power u/s 30 of the OVAT Act to pass any assessment order or disallow input tax credit.
3) Whether the furnace oil which is used in the process of manufacture of PSF is to be treated as an input as defined in section 2(25) of the OVAT Act and the input tax which has been paid on the purchase of furnace oil claimed as input tax credit under section 2(27) of the OVAT Act against the tax payable on finished product, ie, PSF?
The Court held that furnace oil used in the process of manufacture of PSF is to be treated as an “input” and that the dealer can claim input tax credit on purchase of furnace oil since the furnace oil is a consumable directly used in the manufacture of PSF for sale. It is not necessary that the consumable must go into the composition of the finished product, but it must be used in such manufacture or processing.
Please refer [2008] 15 VST 228 for full text of the judgment.
i want to know whether input tax credit is available in capital goods if it is
— not used for manufacturing of taxable goods?
—if it is used for manufacturing of taxable goods?
Input credit on consumable is a broad decicion and will help the local SSI units in Orissa for.
Well decision
Will this benefit of ITC on consumables is availabel for Works Contractors? I feel it should.