TMI Blog2014 (2) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... cent or may be in a given case by 12 per cent. Surely, the Legislature could never have intended the reduction to exceed the tax credit itself. In the present case, this is precisely what would happen if the interpretation of the State is accepted. We have noticed that the furnace oil invites tax at the rate of four per cent. The tax credit thus available to the respondent as a dealer would be limited to such amount. If such tax credit available to the respondent is reduced by eight per cent, it would bring about a situation where credit available is four per cent and what is reduced is eight per cent. Surely, the Legislature never envisaged any such situation while framing section 11(3)(b) of the VAT Act - Decided against Revenue. - Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent assessee is engaged in the business of manufacturing selling polymers and chemicals. It has various branches across the country where the goods so manufactured in the State are transferred for sale. The respondent is a registered dealer under the VAT Act. The respondent for the purpose of its manufacturing activity purchased furnace oil, natural gas and light diesel oil from registered dealers. Such fuel is used for its manufacturing activities. Furnace oil is chargeable to value added tax at the rate of 4 per cent while natural gas and light diesel oil invite tax at the rate of 12.5 per cent. Section 11 of the VAT Act pertains to credit and permits a registered dealer who has purchased taxable goods to take credit on the tax paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Sub-section (3) of section 11 which is of importance to us has two clauses (a) and (b). Clause (a) provides that tax credit to be claimed under sub-section (1) shall be allowed to a purchasing dealer on his purchase of taxable goods which are intended for the purpose categories specified in clause (i) to (vii) specified in clause (a). Section 11(3)(a) thus provides for different categories of uses for which such tax credit would be available. Clause (b) to sub-section (3) to section 11, however, provides that notwithstanding anything contained in the said section, amount of tax credit available to a dealer shall be reduced by the amount of tax collected at the rate of 4 per cent on the taxable turnover of purchase if the goods satisfy th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everal reasons. Firstly, clause (b) of section 11(3) pertains to reduction of tax credit otherwise available under section 11. Such reduction is to be applied if the goods satisfy the descriptions contained in sub-clause (i) to (iii) thereof. After clause (i), the Legislature has used the word or . We are conscious that at end of clause (ii) and beginning of clause (iii), the Legislature has not once again used the word or , but has also not added the expression and . Plain reading of the said provisions thus makes it clear that the reduction of tax credit had to be applied to any case which satisfy the description contained in sub-clauses (i) to (iii) not every time such description is satisfied. Further, reduction of amount of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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