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2016 (5) TMI 667 - SUPREME COURT

2016 (5) TMI 667 - SUPREME COURT - [2016] 93 VST 1 (SC) - VAT on petroleum products - Interpretation to Section 2(1)(zd) of DVAT - Roll back in Petrol and High Speed Diesel prices - High Court held that upon the partial roll back w.e.f. 30.11.2006 and upon the complete roll back w.e.f. 16.02.2007 benefit of the proviso ceased to be partly or fully applicable - Held that:- the proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment an .....

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ame to be controlled by introduction of the proviso. When there was no increased component and therefore no liability to pay VAT in respect of such increased component, benefit under the proviso ceased to be applicable. - The proviso cannot be given operation beyond the element of increase, so much so that even after complete roll back, the benefit in respect of that amount must operate. That certainly was not the intent. The idea was to grant benefit only in respect of that element of VAT r .....

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2016 @ SLP(C) No.15274/2012, C.A. No.5105 of 2016 @ SLP(C) No, 15275/2012, C.A. No.5106 of 2016 @ SLP(C) No. 15279/2012, C.A. No.5107 of 2016 @ SLP(C) No. 15374/2012, C.A. No.5108 of 2016 @ SLP(C) No.15379/2012, C.A. No.5109 of 2016 @ SLP(C) No.15680/2012, C.A. No.5110 of 2016 @ SLP(C) No.15732/2012, C.A. No.5111 of 2016 @ SLP(C) No.15736/2012, C.A. No.5112 of 2016 @ SLP(C) No.16330/2012, C.A. No.5113 of 2016 @ SLP(C) No.16333/2012, C.A. No.5114 of 2016 @ SLP(C) No.16498/2012, C.A. No.5115 of 2 .....

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SLP(C) No.17164/2012 & C.A. No.5127 of 2016 @ SLP(C) No.17510/ 2012) JUDGMENT UDAY UMESH LALIT, J. 1. Leave granted. 2. These appeals by special leave challenge correctness of the common judgment and order dated 27.02.2012 passed by the High Court of Delhi at New Delhi in Sales Tax Appeal No.20 of 2012 and other connected matters. Apart from lead matter i.e. Sales Tax Appeal No.20 of 2012 filed by Indo Burma Petroleum Corporation Ltd., the High Court also dealt with Sales Tax Appeal Nos.6, .....

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sed by ₹ 4/- and ₹ 2/- respectively from the midnight of 5/6th June, 2006. This increase in rates would have resulted in ad valorem increase in Value Added Tax (VAT) at the rate of 0.66 paise per litre of Petrol and 0.22 paise per litre of High Speed Diesel. With a view to grant some relief in the price rise to the customers, the Government of National Capital Territory of Delhi issued a Memorandum dated 20.06.2006 which was to the following effect: GOVERNMENT OF NATIONAL CAPITAL TER .....

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trol and diesel as has been announced by the Government of India with effect from 6th June, 2006. Therefore, diesel and petrol shall be sold in the National Capital Territory of Delhi by not taking into account the component of the Value Added Tax on the increased price with immediate effect, meaning thereby that VAT shall continue to be charged on the pre-revised prices of diesel and petrol till further notification in this regard. [HANS RAJ] ADDITIONAL COMMISSIONER [POLICY] 4. On 21.06.2006 an .....

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ts, the amount of valuable consideration payable to a person for such delivery including hire charges, interest and other charges incidental to such transaction; (iii) in relation to transfer of the right to use any goods for any purpose (whether or not for a specified period) the valuable consideration or hiring charges received or receivable for such transfer; (iv) any sum charged for anything done by the dealer in respect of goods at the time of, or before, the delivery thereof; (v) amount of .....

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cidental to or ancillary to the sale of goods; (vii) in relation to works contract means the amount of valuable consideration paid or payable to a dealer for the execution of the works contract; less - (a) any sum allowed as discount which goes to reduce the sale price according to the practice, normally, prevailing in trade; (b) the cost of freight or delivery or the cost of installation in cases where such cost is separately charged; and the words "purchase price" with all their gram .....

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irst proviso shall not take effect till the benefit is passed on to the consumers. Explanation:-A dealer's sale price always includes the tax payable by it on making the sale, if any." (The proviso for the sake of convenience has been highlighted in italics.) 5. On 24.11.2006 Delhi Value Added Tax (Amendment) Act, 2006 came into force. While repealing the Ordinance, Section 2 of the Amendment Act provided as under: 2. Amendment of Section 2:- In the Delhi Value Added Tax Act, 2004 [Delh .....

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the commencement of the Delhi Value Added Tax [Amendment] Act, 2006 till such date as the Government may, by notification in the Official Gazette direct: Provided further that the first proviso shall not take effect till the benefit is passed on to the consumer. 6. On 30.11.2006 there was partial roll back of prices of Petrol and High Speed Diesel which had been enhanced with effect from 06.06.2006. The prices were again rolled back and brought to pre 06.06.2006 status w.e.f. 16.02.2007. 7. The .....

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pellants continued to deduct amounts of ₹ 4/- per litre on Petrol and ₹ 2/- per litre on High Speed Diesel from the prevailing sale price and charged/recovered VAT in respect of sale price so reduced by ₹ 4/- and ₹ 2/- as stated above. 8. On 05.06.2007 following Gazette Notification was issued by the Government of NCT: Notification No.F.3[8]/Fin.[T&E]/2007-08/ Dated 5th June, 2007 In exercise of the powers conferred by first proviso to clause [zd] of sub-section [1] o .....

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tion 32 of the Act were issued to the appellants. Notice dated 22.10.2007 issued to the appellants in the lead matter i.e. Indo Burma Petroleum Company Ltd. stated as under: ……The exemption of VAT which was allowed vide notification dated 24/11/2006 was only in respect of that portion of price of petrol & diesel which was incremental to the price of petrol & diesel prevalent as on 5/6/2006. However, it has been observed that the oil company even after reduction in the price .....

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08. It was observed: The amendment clearly says that to extend relief from the increase made in the price level of 05-06-2006 Govt. declared to forgo the VAT on the increased portion taking effect from 06-6-2006. The base price fixed by the Govt. in deciding the exemption was the price level prevailing on 05.05.2006. The amendment was made only to stop the prices from further increase. The Govt. had no intention to allow any relief on the price level prevailing on 05.06.2006 and if any intention .....

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the price decreased on 16-02-07 and brought at par with price on 05-06-2006, the notification issued by the Govt. would deem to have become inoperative. The penalty imposed upon the dealers are consequential to the tax imposed. 11. The matters were carried in appeal by the appellants, namely Appeal Nos.134-147/ATVAT/08-09 and other connected matters. The Appellate Tribunal in its common judgment and order dated 01.12.2011 dismissed the appeals as regards the main issue but set aside the demand .....

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the it could only do so by not charging tax on the increased portion but for doing so it had to exclude the increased portion from the purview of the expression valuable consideration for any sale . In our considered view purpose of the Govt. of NCT of Delhi in introducing the proviso in question, when considered from the plain language of the proviso, was to direct the appellant dealers to continue to pay the VAT as if there was no increase in the prices by the Central Govt. In our considered v .....

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sale consideration under Section 2(1)(zd) of the Act, the obviously the appellants were not to charge VAT on the same as per the definition of the term sale price which came to be controlled by introduction of the proviso in question. When there was no effect of the increased component, in the liability to pay Vat then it was immaterial when there was complete roll back or when the Notification was issued as per this proviso. Thus in our considered view, the submission of the Ld. Counsel for the .....

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e High Court. The High Court took the view that upon the partial roll back w.e.f. 30.11.2006 and upon the complete roll back w.e.f. 16.02.2007 benefit of the proviso ceased to be partly or fully applicable. According to the High Court the proviso simply protected and gave exemption in respect of enhanced ad valorem VAT payable on account of increase in petrol and diesel from 06.06.2006 and the benefit under the proviso ceased to operate partly and fully on and w.e.f. partial and complete roll ba .....

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or decrease in the rates of Petrol and High Speed Diesel. For example, if the price before the increase in rates is taken to be x and the price were to be x+4 as a result of increase w.e.f. 06.06.2006, the benefit of VAT payable in respect of the element of increase i.e. 4 must be available even if upon partial roll back the price were to be x+1 or upon full roll back the price were to be x itself. If the logic is accepted, upon full roll back, according to the appellants the VAT would be payab .....

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