Full Judgment
O.T.REV.No.29/2016 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI THURSDAY, THE 19TH DAY OF NOVEMBER 2020 / 28TH KARTHIKA, 1942 OT.Rev.No.29 OF 2016 AGAINST THE ORDER IN TA (VAT) 626/2011 DATED 15-06-2015 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE: STATE OF KERALA, REPRESENTED BY THE DEPUTY COMMISSIONER (LAW) COMMERCIAL TAXES, ERNAKULAM. BY SR. GOVERNMENT PLEADER SRI V.K.SHAMSUDHEEN RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:
M/S.CONTOUR READY MIX PRIVATE LTD., PALACHUVADU, VENNALA, PIN - 682 028. BY ADV. SRI.P.J.ANILKUMAR BY ADV. SRI.JACOB JOHN TRIVANDRUM BY ADV. SRI.A.KUMAR BY ADV. SMT G.MINI BY ADV. SRI.P.S.SREE PRASAD SENIOR GOVT.PLEADER SRI.V.K.SHAMSUDHEEN THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 19.11.2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: O.T.REV.No.29/2016 -2-
ORDER
T.R.RAVI, J.
Revision by the Revenue. The respondent/assessee engaged
in the manufacture and sale of ready mix concrete claimed input tax credit on capital goods during the year 2008-09. The claim was relating to a 'transit mixture' fixed on Leyland Chassis purchased by the assessee. The Assessing Officer by Annexure A order, rejected the claim stating that the item was included in the negative list published as per SRO No.324 of 2005.
2. Assessee's appeal was dismissed by the Appellate
Authority as per Annexure B order dated 05.01.2011. In further appeal, the Tribunal held that the authorities below had failed in properly identifying the item regarding which the claim was made by the petitioner. The Tribunal held that the machine in question was capital goods and is entitled to input tax credit.
3. The Revenue has challenged the Tribunal's order on the following questions of law;
i). Whether the mixture fixed in the chasis of Ashok Leyland is eligible for input tax as held by the Tribunal. ii). Whether the Tribunal has failed to interpret SRO O.T.REV.No.29/2016 -3-
iii). Whether the item No.7 in SRO 325/05 will cover the mixing machine fixed in the chassis of the Ashok Leyland. iv). Whether the mixture purchased by the assessee can be considered as “capital goods” defined U/s.2(x) of the KVAT Act. v). Whether the transit mixture and ready mixture are covered by Entry 7 of SRO 324/05.”
4. Heard Sri V.K. Shamsudheen, Senior Government Pleader, on behalf of the Revenue and Sri A. Kumar on behalf of the respondent.
5. The Senior Government Pleader referred us to the notification issued by the Government as required under Section 2(x) of the KVAT Act, 2003. The notification has been extracted in
the order of the Tribunal. Reliance is placed on Entry 7, wherein the word 'concrete mixing machine' is used, to support the contention. The relevant entry reads thus: “7. All kinds of cranes, earth movers, JCB, excavators, road rollers, concrete mixing machine and other similar machineries used in connection with supply of labour and services.”
6. According to the Senior Government Pleader, input tax credit is claimed regarding a machine which comes squarely under O.T.REV.No.29/2016 -4-
the category 'concrete mixing machine'. The counsel for the respondent on the other hand submits that the entry has to be understood along with the words “used in connection with supply of labour and services”. According to the counsel, the entry takes in only such concrete mixing machines which functions using labour and he contends that a transit mixer used for transporting ready mix concrete to different sites of work does not come within the purview of Entry 7 in the notification.
7. We find considerable force in the argument of the
counsel for the respondent. A plain reading of the notification shows that it refers to a machine which is utilised for mixing the concrete, using labour. The notification itself is issued in terms of Section 2(x) which is extracted below; “ 2. In this Act, unless the context otherwise requires,- xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx
(x) “Capital goods” means plant, machinery, equipments
including pollution/quality control, lab and cold storage equipments used in manufacture, processing, excluding for job works or rendering of services, packing or storage of goods in the course of business and delivery vehicles but shall not include such goods and civil structure as may be notified by Government.” O.T.REV.No.29/2016 -5-
8. It can be seen that the definition takes in delivery
vehicles also along with plant, machinery, equipments, etc. used in manufacture, processing, packing or storage, in the course of business. The transit mixer mounted on a vehicle, transports ready mix concrete, without spoiling the mix, to the site of work. As such, it is not the same as a concrete mixing machine used for mixing concrete with the employment of labour alone. Since the machine in question does not come within Entry 7 of the notification, it necessarily has to be considered entitled for the grant of input tax credit.
9. The Tribunal has in its order, considered the contention of
the Revenue and has held that the machinery in question cannot be considered as a concrete mixer, since what it is carrying is ready mix concrete, and the transit mixer mounted on the vehicle rotates while moving, which ensures that the ready mix concrete does not get solidified. The Tribunal also took note of the fact that delivery vehicles have also been excluded from the negative list. Though the concrete mixer mounted on a vehicle cannot be strictly called a delivery vehicle; it is an equipment which keeps the ready mix from clogging and hardening till it reaches the construction site for being
O.T.REV.No.29/2016 -6- used. It is not akin to a concrete mixer operated by labour and is a machinery or equipment which is essential in effective delivery of the goods. We do not find any reason to interfere with the finding
of the Tribunal. The questions of law raised by the Revenue are found against the Revenue. The revision petition fails and is dismissed. The parties will bear their respective costs. Sd/- K. VINOD CHANDRAN JUDGE Sd/- T.R. RAVI JUDGE dsn O.T.REV.No.29/2016 -7- APPENDIX PETITIONER'S EXHIBITS: ANNEXURE A A TRUE COPY OF THE ORDER DATED 08/07/2008 PASSED BY THE ASSISTANT COMMISSIONER, SPECIAL CIRCLE - III, COMMERCIAL TAXES. ANNEXURE B A TRUE COPY OF THE ORDER PASSED BY THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKUAM DATED 05/01/2011. ANNEXURE C A CERTIFIED COPY OF THE ORDER DATED ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM IN TA (VAT) NO.626/2011. ANNEXURE C A TRUE COPY OF ANNEXURE C.