Strict construction of purchase price under VAT law excludes implied additions to turnover of purchases and tax credit computation.

Section 11(3)(b) of the Gujarat Value Added Tax Act, 2003 was construed strictly, and the definition of "purchase price" in section 2(18) was treated as exhaustive. Because that definition did not expressly include VAT, the VAT component could not be added to the aggregate turnover of purchases by implication. The turnover of purchases under section 2(32), and the corresponding reduction in tax credit, therefore had to be computed only on the statutory purchase price. Amounts relating to purchases on which no tax credit was claimed or granted were also excluded. The interpretation adopted by the Tribunal and the High Court was upheld.

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Issues: Whether, for the purpose of section 11(3)(b) of the Gujarat Value Added Tax Act, 2003, the value added tax component and the value of purchases on which no tax credit was claimed or granted could be included in the aggregate turnover of purchases while computing the reduction in tax credit.

Analysis: The definition of "purchase price" in section 2(18) was treated as exhaustive and restrictive. Since the statutory definition specifically included only the duties expressly mentioned therein and did not refer to value added tax, the amount of VAT could not be added by implication. The definition of "turnover of purchases" in section 2(32) depends upon the purchase price, and the mechanism under section 11(3)(b) for reducing tax credit also operates on that basis. In a taxing statute, the Court applied the rule of strict construction and held that no tax can be imposed or enlarged except by clear statutory words.

Conclusion: The VAT component and the value of purchases on which no tax credit was claimed or granted were correctly excluded while computing the taxable turnover of purchases under section 11(3)(b), and the assessee's position was accepted.

Final Conclusion: The appeals challenging the exclusion of those amounts from the computation of taxable turnover of purchases were rejected, and the interpretation adopted by the Tribunal and the High Court was upheld.

Ratio Decidendi: In a taxing provision, an exhaustive statutory definition must be applied as written, and amounts not expressly included cannot be brought into the tax base by implication.

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