Purchase value under works contract tax cannot be inflated by gross profit under the Karnataka VAT scheme.

Section 15(5)(a) of the Karnataka Value Added Tax Act was interpreted to mean that, for works contracts using goods purchased from outside the State or India, tax under Section 4 is payable only on the purchase value of those goods. The Court held that the phrase "value of such goods" is plain and unambiguous and cannot be expanded by adding gross profit or any other notional amount. Applying the rule that a taxing provision must be construed as written, the Court rejected any enlargement of the charging base beyond the statutory language and accepted the assessee's construction.

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Issues: Whether, on the proper interpretation of Section 15(5)(a) of the Karnataka Value Added Tax Act, 2003, the value of goods purchased from outside the State and used in execution of works contracts could be enhanced by adding gross profit for the purpose of levy of tax under Section 4.

Analysis: Section 15 deals with the composition scheme and, by clause (a) of sub-section (5), permits a dealer executing works contracts and purchasing goods from outside the State or outside India to opt for composition, while remaining liable to pay tax on the value of such goods at the rate specified in Section 4. The expression "value of such goods" was held to be plain and unambiguous and to refer to the purchase value of the goods brought from outside the State, not to the sale value or to an amount arrived at by adding gross profit. The Court applied the rule that a taxing provision must be construed as written, without additions or subtractions, and preferred the construction that avoids enlarging the charging base beyond the statutory language.

Conclusion: The levy could not include an addition of gross profit to the purchase value, and the assessee's construction of Section 15(5)(a) was accepted.

Ratio Decidendi: In a taxing provision, where the statute clearly fixes liability on the "value of such goods", that phrase must be given its ordinary meaning and cannot be expanded by implying gross profit or any other notional addition.

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