Tax credit reduction under Gujarat VAT can apply under both contingencies, but only up to the available credit.

Section 11(3)(b) of the Gujarat Value Added Tax Act, 2003 treats tax credit as a statutory concession subject to restriction. Sub-clause (ii), covering branch transfer of goods outside the State, and sub-clause (iii), covering fuels used in manufacture, are separate event-based contingencies; where both are satisfied, the reduction may apply under each sub-clause because the provision does not link them with an "or". The reduction is nevertheless capped by the tax credit actually available, so it cannot exceed the VAT credit earned on the relevant goods.

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Issues: Whether the reduction of tax credit under section 11(3)(b) of the Gujarat Value Added Tax Act, 2003 applies once where goods fall both within sub-clause (ii) and sub-clause (iii), or whether the reduction can be applied separately under both sub-clauses.

Analysis: The tax credit under section 11 is a statutory concession subject to the restrictions in sub-section (3). Sub-clause (ii) deals with branch transfer of goods outside the State, while sub-clause (iii) deals with fuels used in manufacture; these are separate event-based contingencies. The absence of the word "or" between sub-clauses (ii) and (iii), coupled with the structure and punctuation of the provision, indicates that both reductions may operate where both contingencies are satisfied. The Court also held that the tax credit reduction cannot exceed the actual credit available, so in the case of furnace oil, where the VAT paid was 4%, the reduction cannot exceed 4%.

Conclusion: The reduction under section 11(3)(b) is attracted separately under sub-clauses (ii) and (iii) where both are satisfied, subject to the limit that the reduction cannot exceed the tax credit actually available.

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