Interpreting the Gujarat Value Added Tax Act of 2003, the Supreme Court declared that the ‘Purchase Price’ definition excludes value-added tax. On Friday, the court concluded that VAT does not fall within the tax categories listed under Section 2(18) of the GVAT.
The court highlighted that the ‘Purchase Price’ encompasses valuable consideration paid for purchases, inclusive of duties under the Central Excise Tariff Act, 1985, and the Customs Act, 1962, but notably excludes VAT. This interpretation underscores the legislative intent to keep VAT outside the ‘Purchase Price’ ambit.
The court explained that Sections 2(18), 2(32), and 11 of the GVAT collectively indicate that purchases without VAT inclusion and where VAT is already paid should not be part of the taxable turnover of purchases. The bench asserted that this exclusion was correctly applied in calculating the respondent dealer’s tax liability.
Strict interpretation of tax statutes was emphasized, ensuring that only those explicitly mentioned by the legislature are taxed. Article 265 of the Indian Constitution mandates that taxes cannot be imposed without clear legal authority. The court reinforced that statutes must be read as written, without expanding their scope beyond the legislature’s explicit intent.
In conclusion, the State’s appeal was dismissed, and the tribunal’s order was reinstated.
