TaxTMI 
TaxTMI 
2017 (9) TMI 1307
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....e respondent in its factory situated in the State of Gujarat (hereinafter referred to as the 'appellant State'). After the manufacture of these goods, same are transferred by the assessee to its various branches located in different parts of the country from where those goods are sold. Obviously, in respect of goods transferred to places outside the appellant State, the Value Added Tax (VAT) is paid at the time of sale of those goods in those States, as per the local laws of the said States. The goods are sold in the appellant State as well and in respect of these goods VAT is paid as per the Gujarat Value Added Tax Act, 2003 (for short, the 'VAT Act'). For the purpose of manufacturing the aforesaid goods, namely, polymers and chemicals, the assessee purchases furnace oil, natural gas and light diesel oil (hereinafter referred to as the 'raw material or inputs') from its registered dealers. These fuels are used for the aforesaid manufacturing activities. On purchase of the raw material, VAT is paid at varying rates. On furnace oil, 4% VAT is payable as per the VAT Act, whereas on natural gas and light diesel oil rate of VAT prescribed and payable is 12.5%. Since these inputs are us....
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.... allowed proportionate to the extent they are used for the purposes specified in this sub-section. (b) Notwithstanding anything contained in this section, the amount of tax credit in respect of a dealer shall be reduced by the amount of tax calculated at the rate of four per cent on the taxable turnover of purchases within the State (i) of taxable goods consigned or dispatched for batch transfer or to his agent outside the State, or (ii) of taxable goods which are used as raw materials in the manufacture, or in the packing of goods which are dispatched outside the State in the course of branch transfer or consignment or to his agent outside the State. (iii) of fuels used for the manufacture of goods Provided that where the rate of tax of the taxable goods consigned or dispatched by dealer for branch transfer or to his agent outside the State is less than four per cent, then the amount of tax credit in respect of such dealer shall be reduced by the amount of tax calculated at the rate of tax set out in the Schedule on such goods on the taxable turnover of purchases within the State (4) The tax credit shall not be claimed by the purchasing dealer until the tax period in whi....
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....or cash, deferred payment or other valuable considerations; (mmmm) made from a dealer after the name of such dealer has been published under sub-section (11) of section 27 or section 97; (n) of the goods which remain as unsold stock at the time of closure of business; (nn) of the goods purchased during the period when the permission granted under clause (a) of sub-section (1) of section 14 has remained valid under clause (b) of that sub-section; (o) Where original invoice does not contain the details of tax charged separately by the selling dealer from whom purchasing dealer has purchased the goods; (p)Where original tax invoice or duplicate thereof duly authenticated in accordance with the rules made in this behalf is not available with purchasing dealer or there is evidence that the same has not been issued by the selling dealer from whom the goods are purported to have been purchased. (i) Notwithstanding anything contained in clause (a) or (b) in this sub-section and subject to conditions as may be prescribed, a registered dealer shall be allowed to claim tax credit in respect of purchase tax paid by him under sub-section (1) or (2) of section 9. (ii) Notwithstandi....
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....ere the Capital goods referred to in sub-clause (vii) of clause (a) of sub-section (3) are not used continuously for a full period of five years in the State, the amount of tax credit shall be reduced proportionately having regard to the period falling short of the period of five years. (9) The registered dealer may claim the amount of net tax credit, which shall be determined in the manner as may be prescribed. (10) Where any purchaser, being a registered dealer, has been issued with a credit note or debit note in terms of section 61 or if he returns or rejects goods purchased, as a consequence of which the tax credit availed by him in any period in respect of which the purchase of goods relates, becomes either short or excess, he shall compensate such short of excess by adjusting the amount of tax credit allowed to him in respect of the tax period in which the credit note or debit note has been issued or goods are returned, subject to such conditions as may be prescribed. (11) A registered dealer shall apply fair and reasonable method to determine, for the purpose of this section, the extent to which the goods are sold, used, consumed or supplied, or intended to be sold, us....
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....This order was upheld by the Joint Commissioner of Commercial Taxes in appeal that was preferred by the assessee. However, in further appeal before the Gujarat Value Added Tax Tribunal, the aforesaid view was upset as the Tribunal held that the deduction can be at 4% only and there cannot be double reduction in tax credit admissible to the assessee. The High Court has put its stamp of approval to the aforesaid view of the VAT Tribunal. That is the reason for the appellant State to approach this Court as it is obviously not satisfied with the decision of the High Court. 5) Reasons given by the High Court in taking the aforesaid view can be captured from the following discussion contained in the impugned judgment: "It is not in dispute that in the present case, the taxable goods purchased by the respondent assessee satisfy the description of sub-clause (ii) and (iii) of section 11(3)(b). Despite this, in our view, the Tribunal came to a correct conclusion that denial of tax credit by 4 per cent as provided in clause (b) would have to be done only once. We say so for several reasons. Firstly, clause (b) of section 11(3) pertains to reduction of tax credit otherwise available unde....
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....s, where the language of the statute is plain and clear, effect thereto has to be given and equity does not play any role in these cases. It was further argued that as per the provisions of the VAT Act, VAT was payable on the purchase of furnace oil, natural gas and light diesel oil as well. However, the Legislature intended to give tax credit in respect of these items when such items are used as raw material/inputs for the purpose of manufacturing other products. At the same time, it is the prerogative of the law makers to decide how and under what circumstances such tax credit would be admissible and to what extent. But for such a provision, the assessee did not have any right to claim tax credit and thus the question of double deduction does not arise at all. It was also argued that sub-clause (ii) as well as sub-clause (iii) are attracted in different circumstances and, therefore, the reduction stipulated therein could not be treated as double taxation. The learned counsel proceeded to argue that insofar as sub-clause (ii) is concerned, it would be attracted on satisfying the twin conditions, namely: (a) when taxable goods are used as raw material in the manufacture or in the ....
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.... on the said furnace oil, when used as raw material in the production of polymers or chemicals, would be earned at the rate of 4% under clause (a), the State intended to reduce the same by 8% under clause (b). 10) We have examined the respective contentions minutely and carefully and are of the opinion that the view taken by the High Court in the impugned judgment may not be entirely correct. 11) Let us take up the provision for interpretation in the first instance. 12) Section 11 entails the provision pertaining to the scheme of tax credit, which is the caption of the said Section as well. Sub-section (1) thereof mentions the contingencies when a registered dealer would be entitled to claim tax credit which is equal to the amount of tax collected from the dealer by a registered dealer or tax paid by him during the tax period or tax paid by the purchasing dealer under the Gujarat Tax On Entry of Specified Goods into Local Area Act, 2001. In nutshell, clause (a) of sub-section (1) of Section 11 entitles the registered dealer to claim tax credit of the amount of VAT or entry tax which was paid. However, this tax credit is subject to sub-sections (2) to (12) of Section 11. In this ....
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....material with the only exception of those fuels which are used for the purpose of generation of electricity. 15) Keeping in mind the aforesaid aspects, we advert to Section 11(3) (b). It is a non-obstante clause as it starts with the word 'notwithstanding'. Another aspect which is to be necessarily kept in mind is that it is the 'amount of tax credit' which a dealer would be entitled to claim under clause (a) that is to be reduced at the rate of 4% and this reduction is to be effected in three eventualities provided under sub-clauses (i), (ii) and (iii). Insofar as sub-clause (i) is concerned, it pertains to trading activity and there is no question of any overlap between sub-clause (i) on the one hand and sub-clauses (ii) and (iii) on the other. Further, insofar as sub-clauses (i) and (ii) are concerned, same are disjunctive as the word 'or' is inserted between these two clauses. However, when we come to clauses (ii) and (iii), where there is a possibility of overlap (as it has happened in the instant case as well), there is no word 'or' used between clauses (ii) and (iii). Sub-clause (ii) finishes with the punctuation mark full stop and then sub-clause (iii) starts. This depic....
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....r Entry 3 of List II the State Legislature can confer jurisdiction and powers or restrict or withdraw the jurisdiction and powers already conferred on any of the courts except the Supreme Court, in respect of any statute. Therefore, the State Legislature has the power to make a law with respect to the jurisdiction and powers of the High Court." 69. In Aswini Kumar Ghosh v. Arabinda Bose [AIR 1952 SC 369], Mukherjea, J. in AIR para 57 has observed that: (SCR p. 41) "Punctuation is after all a minor element in the construction of a statute, and very little attention is paid to it by English courts. ... When a statute is carefully punctuated and there is doubt about its meaning, a weight should undoubtedly be given to the punctuation." 70. In our view the Full Bench of the Punjab and Haryana High Court was right in giving emphasis and meaning to semicolon in Entry 3 of the list after the words "administration of justice" in Rajinder Singh. Semicolon after the words "administration of justice" in Entry 11-A, in our view, has significance in dealing with the topic whether "administration of justice" includes conferring general jurisdiction on High Court in addition to the subo....
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....dealer) purchases his raw material both within the State of Maharashtra and outside the State. Insofar as the purchases made outside the State of Maharashtra are concerned, the tax thereon is paid to other States. The State of Maharashtra gets the tax only in respect of purchases made by the appellant within the State. So far as the sales tax leviable on the sale of the goods manufactured by the appellant is concerned, the State of Maharashtra can levy and collect such tax only in respect of sales effected within the State of Maharashtra. It cannot levy or collect tax in respect of goods which are despatched by the appellant to his branches and agents outside the State of Maharashtra and sold there. In law (apart from Rules 41 and 41-A) the appellant has no legal right to claim set-off of the purchase tax paid by him on his purchases within the State from out of the sales tax payable by him on the sale of the goods manufactured by him. It is only by virtue of the said Rules - which, as stated above, are conceived mainly in the interest of public - that he is entitled to such set-off. It is really a concession and an indulgence. More particularly, where the manufactured goods are no....