The Supreme Court interpreted the definition of "purchase price" ...

Strict interpretation of tax statutes. "Purchase price" excludes purchases sans VAT credit. Taxable turnover excludes VAT paid.

Case Laws     VAT and Sales Tax

August 5, 2024

The Supreme Court interpreted the definition of "purchase price" u/s 2(18) of the Gujarat Value Added Tax Act, 2003 (GVAT Act). It held that purchases on which value added tax is neither claimed nor granted are required to be excluded for computing "taxable turnover of purchases" u/s 11(3)(b) of the Act. The Court emphasized the strict interpretation of tax statutes, adhering to the natural construction of words used in the provisions. The definition of "purchase price" is enumerative and exhaustive, limited to the categories enumerated, excluding components not covered. Consequently, the taxable turnover of purchases must be calculated after deducting purchases on which no tax credit was claimed or granted, and the value added tax component already paid. The Tribunal's order, upheld by the High Court, correctly excluded such components from the respondent dealer's turnover for computing tax liability u/s 11(3)(b) of the GVAT Act.

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