An application filed under section 84 of Delhi Value Added Tax Act, 2004and the question put up for determination under the aforesaid provision of law is as under: -
"What is the rate of VATon Diesel Generating sets?"
Applicant argued that Diesel Generating sets are capital goods used to provide electric power in case of failure of utility power. DG Sets are used in the industry for manufacturing of goods. Since the item 'Diesel
Generating Sets' are not specified under any of the schedules, it attracts VAT@ 12.5%. He further argued that DG sets should be considered uhder entry 86(xxviii)of Third Schedule appended to DVATACt, 2004 to attract VAT-rate @ 5%.
The DR appearing on behalf of the department stated that Entry 86 of the third schedule of the DVATact 2004 mentioned ca,pital goods which include machinery used in various industries. The machineries which are covered under the entry are clearly mentioned in the entry itself. The contention of the applicant is true to the extent that Diesel Generating sets are used to provide electric power in case of failure of utility power, but they are not machinery as they are not manufacturing anything they are just providing support to the machinery. Therefore, they fall under residual entry and taxed at 12.5%.
After hearing both parties ,Commissioner held that the Diesel Generating sets are not manufacturing anything and they are only giving support to the machinery, hence, they are not covered under the intent of entry 86 of the Third Schedule appended to the DVATAct 2004 because if it would have been the intention of the legislature then it would have 'been clearly mentioned in the entry itself. Therefore, Diesel Generating Sets are unspecified items taxable at the rate of 12.50% under section 4(1(e) of the DVAT Act, 2004.
"What is the rate of VATon Diesel Generating sets?"
Applicant argued that Diesel Generating sets are capital goods used to provide electric power in case of failure of utility power. DG Sets are used in the industry for manufacturing of goods. Since the item 'Diesel
Generating Sets' are not specified under any of the schedules, it attracts VAT@ 12.5%. He further argued that DG sets should be considered uhder entry 86(xxviii)of Third Schedule appended to DVATACt, 2004 to attract VAT-rate @ 5%.
The DR appearing on behalf of the department stated that Entry 86 of the third schedule of the DVATact 2004 mentioned ca,pital goods which include machinery used in various industries. The machineries which are covered under the entry are clearly mentioned in the entry itself. The contention of the applicant is true to the extent that Diesel Generating sets are used to provide electric power in case of failure of utility power, but they are not machinery as they are not manufacturing anything they are just providing support to the machinery. Therefore, they fall under residual entry and taxed at 12.5%.
After hearing both parties ,Commissioner held that the Diesel Generating sets are not manufacturing anything and they are only giving support to the machinery, hence, they are not covered under the intent of entry 86 of the Third Schedule appended to the DVATAct 2004 because if it would have been the intention of the legislature then it would have 'been clearly mentioned in the entry itself. Therefore, Diesel Generating Sets are unspecified items taxable at the rate of 12.50% under section 4(1(e) of the DVAT Act, 2004.
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