LexTHE STATE OF KARNATAKA versus M/S. M. K. AGRO TECH. PVT. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
(2017] 12 S.C.R. 1007
THE STATE OF KARNATAKA
v.
Mis. M. K. AGRO TECH. PVT. LTD.
(Civil Appeal Nos.15049-15069 of20l7)
SEPTEMBER 22, 2017
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.)
A
B
Karnataka Value Added Tax (Act). 2003 -
ss. 5, 17 -
Karnataka Value Added Tax Rules, 2005 - 1: 13 { - Partial rebate of
input tax u/s.17 of KVAT Act -Applicability of -Assessee purchases
C
.. oiled sunflower cake a:~ an input, extracts oil out of it and then oil
is sold in the market ~.However, when sunflower oil is extracted,
by-product in the form of de-oiled sunflower oil cake· also becomes
available -Assessee also sells de-oiled cake - De-oiled cake is an
exempt good and, therefore, it does not suffer any VAT- s.17(1)
relates to those contingencies where the Jina/products are more D
than one and output tax is payable on the sale of one such final
product but other final product is exempted from payment of the
said output tax - Keeping in view s.17(1), appellant-State took view
that the assessee would be entitled to only partial rebate of input
tax uls.17 of the Act on de-oiled cake because of the reason that
E
though output tax is paid on sunflower oil, it is not paid on the sale
of de-oiled cake - However, asses.see contended that s.17 of the
Act would not be ·applicable - High Court accepted plea of asses.see
and gave full input tax deduction - On appeal, held: The view taken
by the High Court is e1•roneous -
Plai~ language of s.17(1) afloH;s
partial rebate on the 'sales' of taxable goods and goods exempt
F
uls.5 - s.17 of the Act gets attracted in the instant case, as De-piled
c(lke is a saleable commodity which i,~ actually sold by the re.1pondent
· assessee - De-oiled cake fits into the definition of 'goods' and this
commodity is exempt from payment of i:my VAT uls.5 of the Act -
Secondly, High Court has not taken note of t.131 (3) of the Rules,
G
which is applied in cases where input tax relating to both sale and
taxable goods and exenipt goods is known and in that situation,
under this sub-rule formula is given to work out the partial deduction
- Thirdly, ivhen literal inte1pretation to s.17 is given, the.case of'
asses.see would get covered thereby, howeve1; High Court resorted
1007
H
1008
SUPREME COURT REPORTS
(2017] 12 S.C.R.
A
B
lo /he purposive consln1clion lo achieve /he object, which was
erroneous - Fourthly, the entire scheme of the KVAT Act is to be
· considered and s.17 to be applied in that con/ext - If Legislature
has decided to give partial rebate of input tax 11nder the
circumstances mentioned in that provision, that has to be strictly
applied.
Interpretation of Statutes - Taxing Statutes - Literal
constr11ction and p11rposive construction - High Court chose to
depart from the literal constn1ction of s.17 of KVAT Act, on the
ground that literal constmction would lead to absurdity and would
C defeat the object of the Karna/aka Value Added Tax (Act), 2003 - It
resorted to purposive construction to achieve the object for which
the provision of s.17 is enacted -Approach of the High Court -
Held: Not proper - There was no reason for departing from the
principle of literal constmclion in a taxing statute - Taxing statutes
are to be interpreted literally - Karnataka Value Added Tax (Act),
D
2003 - s.17.
E
F
Allowing the appeals, the Court
HELD: 1. Section 17 of the Karnataka Value Added Tax
(Act), 2003 gets attracted in the instant case and the view taken
by the High Court ls erroneous. The first mistake which is
committed by the High Court is to ignore the plain language of
sub-section (1) of Section 17. This provision which allows partial
rebate makes the said provision applicable on the 'sales' of
taxable goods and goods exempt under Section 5. Thus, this sub-
section refers to 'sale' of the 'goods', taxable as well as exempt,
and is not relatable to the 'manufacture' of the goods. The High
Court has been swayed by the fact that while extracting oil from
sunflower, cake emerges only as a by-product. Relevant event
is not the mahufacture of an item from which the said by-product
is emerging. On the contrary, it is the sale of goods which triggers
the provisions of Section 17 ofKVAT Act. Whether it is by-product
G or manufactured product is Immaterial and irrelevant. Fact
H
. remains that de-oiled cake is a saleable commodity which is
actually sold by the respondent-asscssee. Therefore, de-oiled
cake fits into the definition of "goods" and Excerpt shown. Read the full judgment & AI analysis in Lexace.