STATE OF GUJARAT versus RELIANCE INDUSTRIES LTD.

Citation: [2017] 13 S.C.R. 25 · Decided: 22-09-2017 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

[2017] 13 S.C.R. 25 
STATE OF GUJARAT 
v. 
RELIANCE INDUSTRIES LTD. 
(Civil Appeal Nos. 13047-13048 of2017) 
SEPTEMBER 22, 2017 
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.] 
A 
B 
Gujarat Value Added Tax Act, 2003 - ss.11(3)(b), 12 -
Respondent-assessee is engaged in the business of manufacturing 
and selling polymers and chemicals in the appellant-State - For the 
C 
purpose of manufacturing said goods, the assessee purchases raw 
materials/inputs which are fuels, namely furnace oil, natural gas 
and light diesel oil - On purchase of such raw materials, VAT is 
paid at varying rates - Under s.JJ(l)(a) credit is given to a dealer 
on the VAT paid at the time of purchase of such raw materials which 
are used in manufacturing the final products - However. s.11 (3)(b) 
D 
provides that if the goods fall in the categories mentioned in sub-
clauses (i), (ii) and (iii), the tax credit is to be reduced by the amount 
of tax calculated at the rate of 4% on the taxable turnover of 
purchases within the State - In the instant case, since after the final 
product is produced, the goods are transferred by assessee to its 
E 
various branches outside the State, hence, the goods so transferred 
are covered under sub-c/ause(ii) - Also the raw material/inputs used 
in the manufacture of instant goods are fuels, hence it falls under 
sub-clause (iii) as well - Issue as to whether the tax credit is to be 
reduced at the rate of 4% under sub-clause (ii) and again at the 
same rate under sub-clause (iii) as well or deduction is permissible 
F 
only once - On appeal, held: Section 11 (3)(b) is a non-obstante clause 
as it starts with the word 'notwithstanding' - The 'amount of tax 
credit' which a dealer is entitled to claim ulcl. (a) which is to be 
reduced at the rate of 4%, is effected in three eventualities provided 
under sub-clauses (i), (ii) and (iii) - Between sub-clauses (i) and G 
(ii) there is no question of any overlap and the same are disjunctive 
as the word 'or' is inserted between these two clauses - However, 
between clauses (ii) and (iii), there is a possibility of overlap (as in 
the instant case), 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 depicts the iry/e11tic:1 nf H 
26 
A 
B 
SUPREME COURT REPORTS 
[2017] 13 S.C.R. 
the Legislature, namely, reduction is not confined to one of the 
aforesaid two isub-clauses and it can occur under both these 
provisions - Thus, reduction of 4% would be applied whenever a 
case gets covered by sub clause (ii) and again when sub-clause (iii) 
is attracted -· However, this would be subject to one limitation, that 
in cases where VAT paid on such raw material is 4%, as in the case 
of fi•rnace oil, reduction cannot be more than that - Gujarat Tax 
On Entry of Specified Goods into Local Area Act, 2001. 
Interpretation of Statutes - Taxing statutes -Interpretation of 
- Held: Taxing statutes are to be interpreted literally. 
C 
Interpretation of Statutes - Taxing statute - Intention of 
D 
E 
Legislature - Held: How much tax credit is to be given and under 
what circumstances, is the domain of the Legislature and the courts 
are not to tinker with the same. 
Allowing the appeals, the Court 
HELD: 1.1 The tax credit which is admissible to the 
purchasing dealer is subject to provisions of sub-section (2) of 
Section 12, Gujarat Value Added Tax Act, 2003. Sub-section (3)(b) 
provides that Ir the goods are falling in the categories mentioned 
in sub-clauses (i), (ii) and (iii), the tax credit is to be reduced by 
the amount of tax calculated at the rate of 4% on the taxable 
turnover of pq.rchases within the State. The raw material/ inputs 
used in the in.tant goods are fuels. Sub-clause (ii) includes such 
goods in case the taxable goods are dispatched outside the State 
in the course of branch transfer. After the final product is 
produced, the assessee transfers these goods to its various 
F 
branch office$, many of which are located outside the State and, 
therefore, those goods which are so transferred would be covered 
by this sub-clause and in respect of such goods which are 
transferred outside the State and are taxable under the VAT Act, 
the tax credit, is to be reduced by 4%. Since the raw material in 
G the instant goods is in the nature of fuels used for the manufacture 
of goods, it gets covered by sub-clause (iii) as well. [Para 3) 
[37-E-G] 
1.2 Section 11 entails

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