Case Details M/s Modi Naturals Ltd. vs The Commissioner of Commercial Tax Up

Court

Supreme Court of India

Date

6 November 2023

Case No.

Civil Appeal No (S). 5822-5823 of 2023

Result

Allowed

Bench

D.Y. Chandrachud, J.B. Pardiwala, Manoj Misra

Citation

[2023] 15 S.C.R. 746 : 2023 INSC 974

Issue for consideration

(a) Whether the assessee is entitled to claim full amount of tax paid towards the purchase of raw Rice Bran as ITC on the basis of the provisions of s.13(1)(a) r/w. S. No. 2(ii) of the Table appended thereto and s.13(3)(b) r/w. Explanation (iii) of s.13 of the UP VAT Act?; (b) Whether the scope of the word “goods” as defined u/s. 2(m) of the UP VAT Act as outlined in s.13(1)(f) of the UP VAT Act should be limited to only “taxable goods”?; (c) Whether the decision of the Supreme Court in the case of M.K. Agro Tech has any application to the case on hand? Uttar Pradesh Value Added Tax Act, 2008 – On the basis of the statutory provisions of s.13(1)(a) read with S.No. 2(ii) of the Table appended thereto and s.13(3)(b) read with Explanation (iii) to s.13 of the UP VAT Act, the assessee claimed full amount of tax paid as ITC – The High Court relying on the decision of this Court in the case of State of Karnataka v. M.K. Agro Tech Private Limited, took the view that a dealer has no vested right to seek the benefit of ITC as the same is just a concession by virtue of the provisions of the Act – The High Court held that the provisions of s.13(1)(a) read with S. No. 2(ii) of the Table appended thereto and s.13(3)(b) r/w. Explanation (iii) of the UP VAT Act are not applicable as asserted by the assesee and the case of the assessee stood covered by s.13(1)(f) of the UP VAT Act – Propriety: Held: A bare perusal of the scheme u/s. 13 of the UP VAT Act [and specifically u/s. 13(1)(a)] makes it abundantly clear that in cases where the purchased goods (in the present case Rice Bran) are used in the manufacture of taxable goods (in the present case RBO and physically refined RBO) except the non-VAT goods, and where such manufactured goods are sold within the State or in the course of inter-state trade and commerce, the registered dealers (like the assessee herein) are entitled to claim input tax credit of the full amount – The charging section of the UP VAT Act, therefore, entitles the assessee to claim full amount of tax paid on the purchases as ITC – Furthermore, s.13(3)(b) of the UP VAT Act, introduces the concept of proportionality in the scheme of the enactment and by means of a deeming fiction provides that where during the manufacture of VAT goods, exempt and non-VAT goods (except as by-product or waste product) are produced, the amount of ITC credit may be claimed and may be allowed in proportion to the extent they are used or consumed in manufacture of taxable goods other than the non-VAT goods and exempt goods – Explanation (iii) to Section 13, forbids the Assessing Authority as well as the assessee from raising any dispute in regard to the allowability of the ITC in cases where exempted goods are being produced as a by-product or waste product during the process of manufacture – The High Court committed an error in passing the impugned judgment relying on the decision rendered in M.K. Agro Tech – The impugned common judgment and order passed by the High Court is set aside. [Paras 47, 48, 50]

Headnote

Uttar Pradesh Value Added Tax Act, 2008 – s. 2(m) – Scope of the word “goods”:

Held: The definition of “goods” under Section 2(m) of the UP VAT Act does not differentiate between exempt and taxable goods and equally, the word “goods” under Section 13(1)(f) of the UP VAT Act has also not been qualified by the word “taxable”. [Para 29]

Interpretation of Statutes – Taxing Statute:

Held: It is well accepted that a statute must be construed in accordance with the intention of the Legislature and the courts should act upon the true intention of the Legislation while applying law and while interpreting law. In the litigation on hand, we have been asked to interpret the provisions of a taxing statute. [Para 36]

LIST OF CITATIONS AND OTHER REFERENCES

State of Karnataka v. M.K. Agro Tech Private Limited, [2017] 12 SCR 1007 : (2017) 16 SCC 210 – held inapplicable.

CIT v. Kasturi and Sons Ltd. (1999) 3 SCC 346 : [1999] 1 SCR 1207; State of W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 20 – relied on. Central India Spg. and Wvg. & Mfg. Co. Ltd. v. Municipal Committee, Wardha [1958] SCR 1102; AIR 1958 SC 341; CIT v. Jalgaon Electric Supply Co. Ltd. [1960] SCR 880 : AIR 1960 SC 1182; CIT v. Central India Industries Ltd. [1972] 1 SCR 619 :(1972) 3 SCC 311; Azam Jah Bahadur v. Expenditure Tax Officer (1971) 3 SCC 621 : AIR 1972 SC 2319 : [1972]

1 SCR 470; Kapil Mohan v. CIT [1998] 3 Suppl. SCR 647 : (1999) 1 SCC 430; State of M.P. v. Rakesh Kohli [2012] 6 SCR 661 :(2012) 6 SCC 312; Rajasthan Rajya Sahakari Spg. & Ginning Mills Federation Ltd. v. CIT (2014) 11 SCC 672; State Bank of Travancore v. CIT (1986) 2 SCC 11 : 1986 SCC (Tax) 289 – referred to.

Partington v. Attorney General (1869) LR 4 HL 100; Cape Brandy Syndicate v. IRC (1921) 1 KB 64; Canadian Eagle Oil Co. Ltd. v. Selection Trust Ltd., 1946 AC 119 at p. 140 (HL); Ormond Investment Co. v. Betts 1928 AC 143 (HL); Mapp v. Oram 1970 AC 362 : (1969) 3 WLR 557 : (1969) 3 All ER 215 (HL); IRC v. Ross and Coulter (1948) 1 All ER 616 (HL) – referred to.

OTHER CASE DETAILS INCLUDING IMPUGNED

ORDER AND APPEARANCES

JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT J. B. PARDIWALA, J. 1. Since the issues raised in both the captioned appeals are the same, the parties are also the same and the challenge is also to the self-same judgment passed by the High Court, those were taken up for hearing analogously and are being disposed of by this common judgment and order. 2. For the sake of convenience, the appellant shall hereinafter be referred to as the assessee and the respondent shall hereinafter be referred to as the revenue. 3. These appeals are at the instance of an assessee, duly registered under Sectio

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