M/S Riviera Home Furnishings PVT. LTD. vs. State Of Haryana And Anr.

Held

The Court held that the Tribunal was not justified in declining the relief of input tax credit (ITC) to the appellant. The reasoning was based on the fact that the State itself had issued a clarification in favour of the appellant's contention. This clarification, issued under Section 56(3) of the Haryana Value Added Tax Act, 2003, stated that diesel generating sets used as standby generators to ensure uninterrupted power supply to a manufacturing plant are considered part of the plant and machinery, and ITC is admissible on their purchase. The Court noted that this clarification was subsequently relied upon by the Tribunal itself in the case of Suzuki Powertrain India Limited, where similar issues were decided in favour of the assessee. The Court found no reason to deny the same relief to the appellant. The substantial question of law was answered in the negative. The operative direction was to allow the appeals, granting the appellant the benefit of ITC on the purchase of the diesel set.

Facts

The appellant, M/s Riviera Home Furnishings Private Limited, is engaged in manufacturing and trading of bath mats and carpets, primarily for export. Due to power shortages and to meet export deadlines, the appellant purchased generator sets. The assessing authority denied input tax credit (ITC) on these purchases, a decision upheld by the First Appellate Authority and the Haryana Tax Tribunal. The appellant contends that the Tribunal erred by referring to inapplicable provisions of the Haryana Value Added Tax Act, 2003. Following the Tribunal's decision, M/s Bhaskar Gensets Private Limited sought clarification from the department under Section 56(3) of the Act regarding ITC on generator sets used as part of plant and machinery. This clarification was issued in favour of the assessee. Subsequently, the Tribunal, in a similar case (Suzuki Powertrain India Limited), allowed ITC based on this departmental clarification.

Key Issues

1. Whether, on the facts and in the circumstances, the Tribunal was justified in holding that Input Tax Credit is not admissible on the purchase of generator sets and their parts, which are capital goods used in the generation of electricity for manufacturing taxable goods for sale? The appellant argued that the Tribunal wrongly applied Schedule-E, entries 5(i) and 5(ii) of the Haryana Value Added Tax Act, 2003. They relied on a subsequent departmental clarification issued under Section 56(3) of the Act, which affirmed that diesel generating sets used to ensure uninterrupted power supply to a manufacturing plant are part of plant and machinery, and ITC is admissible on their purchase. The appellant also cited a Tribunal order in Suzuki Powertrain India Limited, which allowed ITC based on this clarification. The respondent State did not deny the existence of the departmental clarification or the Tribunal's order in the Suzuki Powertrain case.