A person in service industry can avail input tax credit-vat

This query is : Resolved

Ramesh (Querist)
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22 March 2013 Hi All,

If the persons are engaged in service industry say handling container freight station. They have to make sales of unclaimed cargo thru auction with the permission of customs, certain scraps etc. and as such they are falling under the category of dealer and have to pay applicable vat on such auction/sale. Can these persons claim input tax credit of vat if any paid on purchase of capital goods.
Rgds,
Ramesh

CA Parul Saxena

CA Parul Saxena (Expert)
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22 March 2013 In my opinion it can not as capital goods are not purchased to facilitate sale of unclaimed cargo....let's wait for other's opinion...

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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23 March 2013 Capital goods are meant to meant to manufacture or process some product.In a cargo handling business there can not be any need for capital goods....mjk

Ramesh

Ramesh (Querist)
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25 March 2013 Thanks Sir. In fact, they have to purchase some kinds of cranes to handle the containers and these are treated as Plant & machinery for them and accordingly it is capitalised. In terms of sales tax, I don't know whether it is capital goods or not.Please advise whether on that basis they can claim input credit of VAT paid on such cranes.
Rgds,
Ramesh

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