Purchases not eligible for set-off [Rule 54]
No Set-off under any rule shall be admissible in respect of:
(a) Vehicles Held as Capital Assets : No set-off can be claimed on purchases of motor
vehicles (being ‘passenger vehicles’) treated by the dealer as capital assets and
parts, components and accessories thereof. However, this does not apply to (a)
goods vehicles (b) a dealer engaged in the business of transferring the right to use
(e.g. hire or lease of) such vehicles.
(b) Motor Spirits : No set-off can be claimed on purchases of motor spirits. This does
not apply to Outside Maharashtra Sales (OMS), exports or stock transfers.
(c) Crude Oil : No set-off can be claimed on purchase of crude oil when used by an oil
refinery for refining.
(d) Consumables/Capital Assets for Job Work : No set-off can be claimed on any
purchase of consumables or capital assets by the claimant dealer engaged in doing
job work or labour work.
(e) RM Purchases By EC Holder : No set-off can be claimed on any purchase of raw
materials made by any dealer to whom an Entitlement Certificate to claim incentives
by way of exemption from tax or deferment of tax has been granted.
(f) Intangible Goods : No set-off can be claimed on any purchase of goods of
incorporeal or intangible nature. However, this does not apply to import licence,
export permit or licence or quota and credit of duty entitlement pass book; Duty Free
Replenishment Certificate, SIM cards; software packages for a trader in software;
copyright which is resold within 12 months of the date of purchase.
(g) Works Contract for Immovable Property : No set-off can be claimed on (i)
purchases effected by way of works contract where the contract results in immovable
property, other than plant and machinery; and (ii) purchases of any goods by a
dealer, the property in which is not transferred [whether as goods or in some other
form] to any other person, which are used in the erection of immovable property other
than plant and machinery. Thus, if purchases are effected by the employer by way of
works contract which results in immovable property, then set off would not be
admissible on corresponding purchases. However, this clause will not be applicable
to plant & machinery.
(h) Purchase by Composition-Scheme-Mandap-Dealer : No set-off can be claimed on
purchases of Mandap, tarpaulin, pandal, shamiana, decoration of such Mandap,
pandar or shamiana, & furniture, fixtures, lights & light fittings, floor coverings,
utensils & other articles ordinarily used alongwith a Mandap, pandal or shamiana if
the purchasing dealer has opted for composition of tax.
(i) Purchases by Hotelier : No set-off can be claimed on purchases made by a hotelier,
which are treated by him as capital assets and which do not pertain to the supply of
food or any other article for human consumption or any drink [i.e. curtains, mattress
etc. used in hotels].
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