Tax credit reduction under VAT law cannot exceed available credit; proviso must be read to preserve the credit itself.

Section 11(3)(b) of the Gujarat Value Added Tax Act, 2003 was interpreted to mean that reduction of tax credit cannot exceed the credit actually available to the dealer. The proviso was read in line with legislative intent and to avoid an interpretation that would nullify the credit itself. Applying the earlier settled construction, the Tribunal's view was held consistent with the provision, and the challenge to that interpretation failed.

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Issues: Whether section 11(3) of the Gujarat Value Added Tax Act, 2003 was rightly interpreted to limit reduction of tax credit so that the reduction does not exceed the credit available.

Analysis: The issue was covered by an earlier decision that had construed the proviso to section 11(3)(b) as indicating a legislative intent to restrict reduction of tax credit to the extent of the credit actually available. The same reasoning applied here. If the State's construction were accepted, the reduction could exceed the tax credit itself, producing a result the Legislature could not have intended. The Tribunal's view was therefore consistent with the settled interpretation of the provision.

Conclusion: Section 11(3) was correctly interpreted, and the challenge to the Tribunal's order failed.

Ratio Decidendi: Reduction of tax credit under section 11(3)(b) cannot exceed the tax credit available to the dealer, because a proviso must be construed to avoid a result that nullifies the credit itself.

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