M/S Tarun Motors vs. The A D C CT
Held
The Court held that even if the transaction involving spare parts and lubricants in repairs is considered a sale, the statute restricts ITC to 75% when such goods are used in a works contract. Therefore, the restriction of ITC to 75% was upheld.
Facts
The petitioner, a dealer in two-wheeler vehicles and service centre, claimed 100% Input Tax Credit (ITC) on spare parts and lubricants used in repairs. The tax authorities restricted the ITC to 75%, treating the use of these parts in repairs as part of a works contract.
Key Issues
Whether the use of spare parts and lubricants in vehicle repairs constitutes a works contract, and if so, what is the eligible Input Tax Credit (ITC) on such items.
Sections Cited
Section 4(7)(a), Section 13(7), Rule 17(1)(b), Section 2(10), Section 2(45)
AI-generated summary — verify with the full judgment below
HON'BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE SMT. JUSTICE KONGARA VIJAYALAKSHMI Writ Petition No. 5387 of 2020
ORDER: (Per Hon’ble Sri Justice U.Durga Prasad Rao)
Writ petitioner challenges the appellate order No.4803 dated 07.12.2019 in Appeal No.12/2018-19 (KNL) passed by 1st respondent dismissing the appeal confirming the assessment order No.142077/2018 dated 31.12.2018 passed by 2nd respondent granting Input Tax Credit (for short “ITC”) on spare parts and lubricants at 75% on the value as against the claim of the petitioner at 100% and demanding the petitioner to pay the difference amount of Rs.3,24,713/- along with interest for the period of delay, as illegal, arbitrary and contrary to the provisions of the A.P.VAT Act, 2005 and consequently to set aside both the impugned orders.
The petitioner’s case succinctly is thus:
i) The petitioner, who is a registered dealer on the rolls of the 2nd respondent under the A.P.VAT Act, 2005, does business in two wheeler vehicles, besides conducting service centre/workshop for servicing/repairing of two wheeler vehicles.
ii) The petitioner purchases spare parts and lubricants from local regis
The judgment continues below.
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