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What is the rate of VAT on Diesel Generating sets?
September, 17th 2014
                      IN THE OFFICE OP COMMISSIONER
                     DEPARTMENT OF TRADE AND TAXES
                      GOVERNMENT OF N.C.T. OF DELHI
                         VYAPAR BHAWAN, NEW DELHI

            12014 ICJ.-8;:r
No.3681 CDVAT                                                  Dated: OJ. dc) .2-0/     i..t
My s. .Jakson & Company,
47, G.B. Road,
Delhi - 110006.

Present for the Applicant                Sh. P.C. Aggarwal, Advocate
Present for the Department               Sh. M.K. Aggarwal, Departmental

         The above named applicant filed an application on 23 I 07 I 2014 under
section 84 of Delhi Value Added Tax Act, 2004 (hereinafter referred to as the "said
Act") and the question put up for determination under the aforesaid provision of
law is as under: -
              "What is the rate of VAT on Diesel Generating sets?"

2.      !he application has been filed in the prescribed format DVAT-42 and the
     ..... requisite fee of Rs.10001 - paid through Demand Draft No.002627 dated
        22.07.2014 drawn on HDFC Bank, Ajmeri Gate, New Delhi-110006.

(L ..   Jakson & Company, is a registered dealer having TIN 07840004472 under
        bVAT Act, 2004 and engaged in manufacturing           and trading of Diesel
        Generating Sets.

4. .    Shri P.C. Aggarwal, Advocate appeared and reiterated the facts and grounds
        of the application and argued that Diesel Generating sets are capitalgoods
        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 considereduhder
        entry 86(xxviii)of Third Schedule appended to DVATACt, 2004           to   attract
        VATrate @ 5%.

5.   The DR appearing on behalf of the department stated that Entry 86 of the
     third schedule of the DVATact 2004 mentioned capital
                                                          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%.

6.   I have heard both the sides and of the considered VIew 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 ifit
     would have been the intention of the legislature then it would have 'beeri
     clearly mentioned in the entry itself. Therefore, Diesel Generating Setsare
     _.                  .                                               ...   -   ...   '-,   '-,-

     unspecified items taxable at the rate of 12.50% under sectiorivlt    l He] of the
     DVATAct, 2004.

7.   Held accordingly.
                                                               (Sanjeev Khirwar)
                                                             Commissioner, VAT

Copy for information and necessary action to:
  1. Applicant
  2. Addl. Commissioner (Law & Judicial)
  3. Addl. Commissioner (System)
  4. Value Added Tax Officer (PolicyBranch)
  5. President, Sales Tax Bar Association (Regd.)
  6. Guard File

                                                             Commtssfoner, VAT
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