Summary
The Supreme Court upheld the Gujarat VAT Tribunal and High Court in holding that, when computing the turnover of purchases for the 4% reduction of tax credit under Section 11(3)(b) of the Gujarat Value Added Tax Act, 2003, both the VAT paid on purchases and the value of purchases on which no tax credit was claimed or granted must be excluded, because the definition of 'purchase price' in Section 2(18) is exhaustive and names only central excise and customs duties.
Issues
- Whether value added tax paid on purchases forms part of the 'taxable turnover of purchases' for the reduction of tax credit under Section 11(3)(b) of the GVAT Act.
- Whether purchases on which tax credit was neither claimed nor granted are to be included in that turnover.
- Whether the definition of 'purchase price' in Section 2(18) of the GVAT Act is exhaustive.
Provisions considered
- Section 2(18), Gujarat Value Added Tax Act, 2003The definition uses 'means' and is enumerative and exhaustive. It includes only duties levied under the Central Excise Tariff Act and the Customs Act among taxes and duties, so VAT, which is not named, is excluded from 'purchase price'. (¶¶ 11, 12, 15)
- Section 2(32), Gujarat Value Added Tax Act, 2003'Turnover of purchases' is the aggregate of purchase price paid or payable, so its scope is controlled by the restricted meaning of purchase price in Section 2(18). (¶¶ 15, 16)
- Section 11(1) and 11(3)(b), Gujarat Value Added Tax Act, 2003Read with Sections 2(18) and 2(32): the 4% reduction of tax credit on the turnover of purchases connected with branch transfers is computed after excluding both the VAT component and purchases on which no tax credit was claimed or granted. (¶¶ 16, 17, 18)
- Article 265, Constitution of IndiaRelied on for the rule that no tax can be extracted without authority of law, supporting strict construction of taxing provisions. (¶ 12)
Held
- Taxing statutes are construed strictly: clear and unambiguous words must be given their plain meaning regardless of consequences, no one is taxed by implication, and words cannot be added or substituted to extend the provision. (¶¶ 12, 13)
- A definition introduced by 'means' is a hard-and-fast definition. Section 2(18) of the GVAT Act is enumerative and exhaustive, confining the taxes and duties included in purchase price to those under the two named central Acts; the legislature thus intended to keep VAT outside 'purchase price'. (¶¶ 14, 15)
- Read together, Sections 2(18), 2(32) and 11 lead to the conclusion that the taxable turnover of purchases under Section 11(3)(b) is calculated after deducting the VAT already paid on purchases and the value of purchases on which no tax credit was claimed or granted. (¶¶ 16, 17)
- The dealer had rightly excluded both components when computing its liability, and the Tribunal's order, affirmed by the High Court, required no interference. (¶¶ 18, 19)
Result
State's appeals dismissed, upholding the Tribunal and the High Court; the connected Transfer Cases were allowed in terms of this judgment.