2024 (8) TMI 198 - SC - VAT and Sales Tax

Gujarat VAT Act Section 2(18) purchase price definition is exhaustive requiring exclusion of paid VAT and unclaimed tax credits from taxable turnover computation

THE STATE OF GUJARAT Versus M/s. AMBUJA CEMENT LTD

THE STATE OF GUJARAT Versus M/s. AMBUJA CEMENT LTD - 2024 INSC 571 Issues Involved:1. Interpretation of 'purchase price' under Section 2(18) of the Gujarat Value Added Tax Act, 2003 (GVAT Act).2. Calculation of 'taxable turnover of purchases' under Section 11(3)(b) of the GVAT Act.3. Inclusion of Value Added Tax (VAT) and unclaimed tax credit in the taxable turnover of purchases.Detailed Analysis:1. Interpretation of 'purchase price' under Section 2(18) of the GVAT Act:The primary issue revolves around the interpretation of 'purchase price' as defined in Section 2(18) of the GVAT Act. The definition includes the amount of valuable consideration paid or payable for any purchase, including duties levied under the Central Excise Tariff Act, 1985, and the Customs Act, 1962, but does not explicitly mention VAT.The court emphasized that the definition is both exclusive and exhaustive, indicating that the legislative intent was to limit the scope of 'purchase price' to the categories explicitly enumerated. The court cited precedents, such as Commissioner of Wealth Tax, Gujarat-III, Ahmedabad v. Ellis Bridge Gymkhana and P. Kasilingam and Others v. P.S.G. College of Technology and Others, to support the principle that tax statutes must be interpreted strictly, and no tax can be imposed by implication.2. Calculation of 'taxable turnover of purchases' under Section 11(3)(b) of the GVAT Act:The appellant argued that the taxable turnover of purchases should include VAT and the value of purchases on which no tax credit was claimed. However, the respondent contended that the statutory provisions did not intend to include VAT within the 'purchase price' for calculating taxable turnover.The court analyzed the relevant statutory provisions, including Section 2(32), which defines 'turnover of purchases' as the aggregate of the amounts of purchase price paid or payable, and Section 11(3)(b), which provides for the reduction of tax credit by four percent on the turnover of purchases of taxable goods consigned or dispatched for branch transfer or used as raw materials in manufacturing.The court concluded that the taxable turnover of purchases should be calculated by excluding the VAT component and the value of purchases on which no tax credit was claimed, as the legislative intent was clear in not including these components within the 'purchase price.'3. Inclusion of VAT and unclaimed tax credit in the taxable turnover of purchases:The appellant's plea was that the lower courts erred in holding that VAT and the value of purchases on which no tax credit was claimed should not be included in the taxable turnover of purchases. The respondent argued that the correct interpretation of the statutory provisions excluded these components from the taxable turnover.The court affirmed the interpretation of the lower courts, stating that the legislative intent was to exclude VAT from the 'purchase price' and, consequently, from the taxable turnover of purchases. The court held that the calculation of taxable turnover should exclude both VAT and the value of purchases on which no tax credit was claimed.Conclusion:The Supreme Court upheld the judgment of the High Court and the Tribunal, affirming that the 'purchase price' under Section 2(18) of the GVAT Act does not include VAT and the value of purchases on which no tax credit was claimed. Consequently, these components should be excluded from the taxable turnover of purchases under Section 11(3)(b) of the GVAT Act. The appeals were dismissed, and the transfer cases were allowed in light of this judgment.