IMPORTANT POINT
VAT – Assessee is not to be taxed without clear words and for that purpose, same must be according to natural construction of words which have been used in that statute.

JUDGMENT :

AUGUSTINE GEORGE MASIH, J.

1. The Appellant herein is the State of Gujarat which has challenged the judgment passed by the High Court of Gujarat dated 28.04.2016 in an appeal preferred by it which was dismissed affirming the order dated 08.06.2015 of the Gujarat Value Added Tax Tribunal Ahmedabad (hereinafter referred to as ‘the Tribunal’), allowing the appeal of Respondent M/s Ambuja Cement, Ltd.

2. The plea taken by the Appellant while challenging the judgments of the High Court and the Tribunal is that the Courts below have erred in holding that Value Added Tax and value of purchases on which no tax credit was claimed nor granted in the assessment, cannot be included in the aggregate of taxable turnover of purchases within the State for the purpose of reduction of tax credit under Section 11(3)(b) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as ‘the GVAT Act’).

3. Two substantial questions of law being framed by the High Court were as follows: -

[1] Whether the Hon'ble Tribunal has erred in law and in facts in holding that value added tax paid on purchases is required to be excluded for computing "taxable turnover of purchases" under section 11(3)(b) of the Act?

[2] Whether the Hon'ble Tribunal has erred in law and in facts by holding that purchases on which value added tax is neither claimed nor granted are required to be excluded for computing "taxable turnover of purchases" under section 11(3)(b) of the Act?

4. The learned senior advocate appearing for the Appellant has asserted that the Respondent dealer essentially calculated the taxable turnover of its purchases under the GVAT Act by excluding the Value Added Tax and value of purchases on which no tax credit was claimed and reduced the taxable turnover of purchases by four per cent on the quantity of goods involved in the manufacture of goods dispatched by way of branch transfer as has been provided in Section 11(3)(b) of the GVAT Act. It is asserted that the Courts below have failed to appreciate that the assessing officer had rightly included the amount of Value Added Tax and unclaimed tax credit in the turnover of purchases as defined in Section 2(32) of the GVAT Act.

5. It was further submitted that the legislative intent has been wrongly interpreted to say that it did not intend to include Value Added Tax within the definition of the purchase price as defined under Section 2(18) of the Gujarat Value Added Tax. Section 2(18) which defines the purchase price is not exhaustive and the Value Added Tax should be included in the purchase price for the purpose of calculation of taxable turnover of purchases. Based on these submissions, it is asserted by the learned senior advocate for the Appellant that the judgments passed by the High Court as well as the Tribunal cannot be sustained and deserve to be set aside by restoring the orders passed by the assessment authorities being in accordance with the law.

6. On the other hand, learned counsel for the Respondent has asserted that the judgment as passed by the Tribunal which has been approved by the High Court has laid down the correct interpretation of the statutory provisions. Supporting the said judgment, the learned counsel submitted that the purchase price as defined aforesaid does not include the Value Added Tax component, and whatever duties and levies are required to be included in the meaning of purchase price are specifically provided for in the form of two Acts i.e., Central Excise Tariff Act, 1985 and the Customs Act, 1962. Apart from these two taxes which have been specifically referred to and provided for in Section 2(18) of the GVAT Act, no other tax is to be included. Had the legislature intended to include the VAT component in the purchase price, the same could have been expressly provided for in the statute.

7. It is further contended by the learned counsel that the scope of Section (11)(3)(b) of the GVAT Act while computing the taxable turnover of purchases cannot be expanded beyo