Purchase price under VAT law excludes input VAT from taxable turnover for input tax credit reduction calculations.

Value added tax paid on purchases is not included in the base for computing taxable turnover of purchases under section 11(3)(b) of the Gujarat Value Added Tax Act, 2003, because "purchase price" in section 2(18) is an inclusive definition and the statutory scheme refers only to specified duties under the Central Excise Tariff Act and the Customs Act. Reading sections 2(18), 2(30), 2(32) and 11(3)(b) together, the Court stated that VAT paid on purchases must be excluded from the computation, and amounts collected under a statutory obligation do not form part of taxable turnover. The Tribunal's view was held consistent with the statutory language and binding authorities.

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Issues: Whether value added tax paid on purchases is to be excluded while computing the taxable turnover of purchases for the purpose of reduction of input tax credit under section 11(3)(b) of the Gujarat Value Added Tax Act, 2003.

Analysis: The expression "purchase price" in section 2(18) of the Gujarat Value Added Tax Act, 2003 is an inclusive definition, and the statute specifically refers only to duties leviable under the Central Excise Tariff Act and the Customs Act. Reading section 2(18) with sections 2(30), 2(32) and 11(3)(b), the basis of computation of taxable turnover of purchases is the purchase price, and the legislative scheme shows that value added tax paid on purchases is not intended to be included in that base. The Court also relied on the principle that amounts collected under a statutory obligation do not form part of taxable turnover, and held that the Tribunal's view was consistent with the statutory language and the binding authorities referred to in the judgment.

Conclusion: Value added tax paid on purchases is required to be excluded while computing taxable turnover of purchases under section 11(3)(b) of the Gujarat Value Added Tax Act, 2003, and the challenge by the State fails.

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