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
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
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
7. Held accordingly.
Copy for information and necessary action to:
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