NDLI: M/s Modi Naturals Ltd. Vs. The Commissioner of Commercial Tax Up

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Uttar Pradesh Value Added Tax Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	U.p. Value Added Tax Act, 2008 (5 of 2008)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	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]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]
Judge	Hon'ble Mr. Justice J.B. Pardiwala
Neutral Citation	2023 INSC 974
Petitioner	M/s Modi Naturals Ltd.
Respondent	The Commissioner Of Commercial Tax Up
SCR	[2023] 15 S.C.R. 746
Judgement Date	2023-11-06
Case Number	5822-5823

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