2024 INSC 572 Civil Appeal No.7874 of 2024, ETC. Page 1 of 23

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7874 OF 2024

THE STATE OF GUJARAT …APPELLANT

Vs.

M/S. AMBUJA CEMENT LTD … RESPONDENT

WITH

CIVIL APPEAL NO. 7875 OF 2024

CIVIL APPEAL NO. 7877 OF 2024

CIVIL APPEAL NO. 7876 OF 2024

WITH

T.C.(C) NOs. 12-13 OF 2019, T.C.(C) NO. 14 OF

2019, T.C.(C) NO. 15 OF 2019 & T.C.(C) NOs. 9-

11 OF 2019

J U D G M E N T

AUGUSTINE GEORGE MASIH, J.

1. The Appellant herein is the State of Gujarat

which has challenged the judgment passed by

Civil Appeal No.7874 of 2024, ETC. Page 2 of 23

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’).

Civil Appeal No.7874 of 2024, ETC. Page 3 of 23

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 tax able

turnover of its purchases under the GVAT Act by

excluding the Value Added Tax and value of

Civil Appeal No.7874 of 2024, ETC. Page 4 of 23

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

Civil Appeal No.7874 of 2024, ETC. Page 5 of 23

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

Civil Appeal No.7874 of 2024, ETC. Page 6 of 23

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 beyond the

provision as provided for under the GVAT Act,

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supporting the said judgment, therefore, it was

prayed for the dismissal of the present appeals.

8. We have considered the submissions made by

the learned counsel for the parties and have

gone through the provisions, as well as the

pleadings.

9. In brief, the facts of the case are that the

Respondent dealer as mentioned calculated the

taxable turnover of its purchases within the

State of Gujarat by excluding the amount

representing Value Added Tax and value of

purchases of which no credit was claimed. This

was asserted to have been done under the

provisions of Section 11(3)(b) of the GVAT Act.

Accordingly, the taxable turnover was calculated

and proportionately reduced by four per cent on

the quantity of goods involved in the

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manufacturing of goods dispatched by way of

branch transfer.

10. The Deputy Commissioner during the process

of audit assessment determined the taxable

turnover of purchases within the State by

including the tax amount i.e., Value Added Tax

Amount and Value of Purchases on which no tax

credit was claimed by the Respondent dealer nor

proposed to be granted in the assessment. On

the basis of this assessment, the Respondent

being aggrieved preferred an appeal before the

Joint Commissioner which was dismissed

leading to the filing of a second appeal before the

Gujarat Value Added Tax Tribunal at

Ahmedabad wherein the same was partly

allowed by holding that the tax and value

purchases on which no tax was claimed nor was

granted in the assessment could not be included

Civil Appeal No.7874 of 2024, ETC. Page 9 of 23

in the aggregate of taxable turnover of

purchases within the State for the purpose of

reduction of tax credit. The State of Gujarat

carried an appeal before the High Court

challenging the order passed by the Tribunal

which has been dismissed affirming the order of

the Tribunal.

11. The issue involved in the present matters

revolves around the definition of Purchase Price

as provided for under sub-Section (18) of Section

2 of the GVAT Act, which reads as follows: -

2. In this Act, unless the context

otherwise requires, -

[ * * * * *]

18. “purchase price ”

means the amount of

valuable consideration

paid or payable by a person

for any purchase made

including the amount of

Civil Appeal No.7874 of 2024, ETC. Page 10 of 23

duties levied or leviable

under the Central Excise

Tariff Act, 1983 or the

Customs Act, 1962 and

any sum charged for

anything done by the seller

in respect of the goods at

the time of or before

delivery thereof, other than

the cost of insurance for

transit or of installation,

when such cost is

separately charged and

includes, -

(a) in relation to –

(i) the transfer,

otherwise than in

pursuance of a

contract of

property in any

goods,

(ii) the supply of

goods by any

unincorporated

association or

body of persons

to a member

thereof,

(iii) the supply by

way of or as part

of any service or

in any other

manner

whatsoever, of

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goods, being food

or any other

article for human

consumption or

any drink

(whether or not

intoxicating), the

amount of cash,

deferred

payment or other

valuable

consideration

paid or payable

therefor,

(b) in relation to the

transfer of property in

goods (whether as goods

or in some other form)

involved in the

execution of a works

contract, such amount

as is arrived at by

deducting from the

amount of valuable

consideration paid or

payable by a person for

the execution of such

works contract, the

amount representing

labour charges for such

execution,

(c) in relation to the delivery

of goods on hir e

purchase or any system

of payment by

Civil Appeal No.7874 of 2024, ETC. Page 12 of 23

installments, the

amount of valuable

consideration payable

by a person for such

delivery.

12. On going through the above definition as has

been provided for, it would indicate that the

same is not only exclusive but exhaustive as

well, it can rather be said to be enumerative.

The first and foremost duty of the Court is to

read the statute as it is and if the words therein

are clear and unambiguous then only one

meaning can be inferred. The Courts are

bound to give effect to the said meaning

irrespective of the consequences so far as the

taxation statutes are concerned. Article 265 of

the Constitution of India, 1950 prohibits the

State from extracting tax from the citizens

without the authority of law. The tax statutes

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have to be interpreted strictly which means

that the legislature mandates taxing certain

persons in certain circumstances which cannot

be expanded or interpreted to include those

who were not intended or comprehended. The

assessee is not to be taxed without clear words

and, for that purpose, the same must be

according to the natural construction of the

words which have been used in that statute.

These words have to be read as it is and thus

cannot be added or substituted which may give

a meaning other than what is expressed in the

provision.

13. In the case of Commissioner of Wealth Tax,

Gujarat-III, Ahmedabad v. Ellis Bridge

Gymkhana

1 this Court held as follows: -

“5. The rule of construction

of a charging section is that

1

1998 (1) SCC 384.

Civil Appeal No.7874 of 2024, ETC. Page 14 of 23

before taxing any person, it

must be shown that he

falls within the ambit of the

charging section by clear

words used in the section.

No one can be taxed by

implication. A charging

section has to be construed

strictly. If a person has not

been brought within the

ambit of the charging

section by clear words, he

cannot be taxed at all.

6. *** what has been

specifically left out by the

legislature cannot be

brought back within the

ambit of the charging

section by implication or by

ascribing an extended

meaning to the word

“individual” so as to

include whatever has been

left out.”

14. In the case of P. Kasilingam and Others v.

P.S.G. College of Technology and Others

2

this Court while interpreting the use of

expressions in the statute observed as follows:

2

1995 Supp (2) SCC 348.

Civil Appeal No.7874 of 2024, ETC. Page 15 of 23

“19…. The use of the word

‘means’ indicates that

“definition is a hard-and-

fast definition, and no

other meaning can be

assigned to the expression

than is put down in

definition”. (See

: Gough v. Gough [(1891) 2

QB 665 : 60 LJ QB 726]

; Punjab Land Development

and Reclamation Corpn.

Ltd. v. Presiding Officer,

Labour Court [(1990) 3 SCC

682, 717 : 1991 SCC (L&S)

71] .) The word ‘includes’

when used, enlarges the

meaning of the expression

defined so as to

comprehend not only such

things as they signify

according to their natural

import but also those

things which the clause

declares that they shall

include. The words “means

and includes”, on the other

hand, indicate “an

exhaustive explanation of

the meaning which, for the

purposes of the Act, must

invariably be attached to

these words or

expressions”. (See

: Dilworth v. Commissioner

Civil Appeal No.7874 of 2024, ETC. Page 16 of 23

of Stamps [1899 AC 99,

105-106 : (1895-9) All ER

Rep Ext 1576] (Lord

Watson); Mahalakshmi Oil

Mills v. State of A.P. [(1989)

1 SCC 164, 169 : 1989 SCC

(Tax) 56] The use of the

words “means and

includes” in Rule 2( b)

would, therefore, suggest

that the definition of

‘college’ is intended to be

exhaustive and not

extensive and would cover

only the educational

institutions falling in the

categories specified in Rule

2(b) and other educational

institutions are not

comprehended. Insofar as

engineering colleges are

concerned, their exclusion

may be for the reason that

the opening and running of

the private engineering

colleges are controlled

through the Board of

Technical Education and

Training and the Director

of Technical Education in

accordance with the

directions issued by the

AICTE from time to time.”

Civil Appeal No.7874 of 2024, ETC. Page 17 of 23

15. In the light of the above reproduced definition

as provided for under Section 2(18) of the GVAT

Act, it becomes obvious that the definition is

enumerative and exhaustive. The use of the

word “means” denote the intention of the

legislature to restrict the scope of the

“purchase price” to the categories enumerated

in the definition itself. The purchase price,

therefore, would be the amount of valuable

consideration paid or payable for any purchase

which would include amount of duties, levied

or leviable under the two acts as has been

provided for in this Section apart from the

other charges as expounded therein. The

scope has been limited to the two Acts

mentioned in the Section itself. The same could

not be expanded and therefore it can be safely

said that the intention of the legislature was to

Civil Appeal No.7874 of 2024, ETC. Page 18 of 23

exclude Value Added Tax from the ambit of

purchase price as the same is not found

mentioned in the categories of tax/duties

enumerated thereunder. Sub-Section (32) of

Section 2 of the GVAT Act defines turnover of

purchases which reads as follows: -

“2. In this Act, unless the context

otherwise requires, -

[* * * * * *]

32. “turnover of

purchases” means the

aggregate of the amounts

of purchase price paid or

payable by a dealer in

respect of any purchase of

goods made by him during

a given period after

deducting the amount of

purchase price, if any,

refunded to the dealer by

the seller in respect of any

goods purchased from the

seller and returned to him

within the prescribed

period.”

Civil Appeal No.7874 of 2024, ETC. Page 19 of 23

16. The above provision makes it amply clear that

the purchase price would be the determinative

factor for calculating the turnover of purchases,

as stated above, the purchase price would be

restrictive within the domain of Section 2(18).

Section 11 of the Gujarat Value Added Tax Act

deals with the tax credit. The relevant portion

thereof reads as follows:

11.(1)(a) A registered dealer

who has purchased the

taxable goods (hereinafter

referred to as the

“purchasing dealer”) shall

be entitled to claim tax

credit equal to the amount

of,-

(i) tax collected from the

purchasing dealer by a

registered dealer from

whom he has purchased

such goods or the tax

payable by the purchasing

dealer to a registered

dealer who has sold such

goods to him during the tax

period, or];

[ * * * * * * * * * * * * * * * ]

Civil Appeal No.7874 of 2024, ETC. Page 20 of 23

(b)The tax credit to be so

claimed under this sub-

section shall be subject to

the provisions of sub -

sections (2) to (12); and the

tax credit shall be

calculated in such manner

as may be prescribed.

[ * * * * * * * * * * * * * * * ]

11.(3)(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 turnover of purchases-

(i) of taxable goods

consigned or dispatched

for branch transfer or to

his agent outside the State,

or

(ii) of goods taxable 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,

Civil Appeal No.7874 of 2024, ETC. Page 21 of 23

(iii) of fuel used for the

manufacture of goods.:]

[Provided that where the

rate of tax of the taxable

goods consigned or

dispatched by a 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

34[taxable turnover of

purchases with in the

State.]

17. The cogent reading of sub-Section (18) of

Section 2 which defines ‘purchase price’, sub-

Section 32 of Section 2 which defines ‘turnover

of purchases’, and Section 11 of the GVAT Act

which deals with entitlement to the tax credit,

would lead to only one conclusion, that the

purchase price would not include purchases on

Civil Appeal No.7874 of 2024, ETC. Page 22 of 23

which no value added tax was claimed nor

granted and the component of value added tax

stood already paid on purchases. Accordingly,

the taxable turnover of purchases would have

to be calculated after deducting both the

components as has been detailed aforesaid.

18. Therefore, the calculation of taxable turnover

of the purchases and reduction value of

purchases on which no tax credit was claimed

nor granted, and component of value added tax

already paid on purchases, was rightly

excluded from the total turnover of the

Respondent dealer while computing his tax

liability under Section 11(3)(b) of the GVAT Act.

19. The order passed by the Tribunal as has been

upheld vide the impugned judgment of the

High Court being in accordance with law calls

Civil Appeal No.7874 of 2024, ETC. Page 23 of 23

for no interference and therefore, the appeals

deserve dismissal.

20. The appeals, accordingly, stand dismissed.

21. As regards the Transfer Cases which were

directed to be heard along with the present

Appeals, are allowed in the light of the above

Judgment passed in the Appeals.

....…………………………… …. J.

(ABHAY S. OKA)

…………………………………… J.

(AUGUSTINE GEORGE MASIH )

NEW DELHI.

AUGUST 02, 2024.