M/S Sapphire Foods India Private ... vs State Of Gujarat
2021 Latest Caselaw 362 Guj

         C/SCA/705/2021                                        ORDER




          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/SPECIAL CIVIL APPLICATION NO. 705 of 2021

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            M/S SAPPHIRE FOODS INDIA PRIVATE LIMITED
                             Versus
                       STATE OF GUJARAT
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Appearance:
MS DHARMISHTA RAVAL(707) for the Petitioner(s) No. 1
for the Respondent(s) No. 1,2,3
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 CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
        and
        HONOURABLE MR. JUSTICE ILESH J. VORA

                            Date : 12/01/2021

                      ORAL ORDER

(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1. We have heard Mr. S.N. Soparkar, the learned senior counsel assisted by Ms. Dharmishta Raval, the learned counsel appearing for the writ­applicant.

2. This appears to be a second round of litigation. The writ­applicant came before this High Court by filing the Special Civil Application No.9183 of 2020 challenging the show­cause notice dated 14th October 2019 and the order dated 3rd June 2020 passed by the Commercial Tax Officer, Vadodara. This writ­application came to be allowed vide order dated 17th August 2020. The order reads thus:­

3. It is admitted by the learned counsels for the parties that against the order dated 3rd June, 2020, statutory appeal would be maintainable under Section 73(1) of the Gujarat Value Added Tax Act, 2003. But what is to be noticed is that against the show cause notice dated 14th October, 2019 (Annexure:B to the petition), issued by the respondent No.2, the petitioner submitted detailed reply dated 10 th December, 2019 (Annexure:C to the petition). But the respondent

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No.2, without considering any of the points raised by the petitioner in its reply, proceeded to pass a nonspeaking order dated 3rd June, 2020 (Annexure:D to the petition).

4. Learned Assistant Government Pleader Shri Chintan Dave could not justify in any manner that the impugned order is a reasoned order or that it was not a non­speaking order. Law is well settled that a non­ speaking order suffers from arbitrariness which goes to the root of the matter and as such, alternative remedy may not come in the way of this Court in entertaining this petition.

5. Accordingly, the petition succeeds and is allowed. The impugned order dated 3rd June, 2020 passed by respondent No.2 is hereby quashed. It is, however, open to the respondent No.2 to pass a fresh order strictly in accordance with law after affording due opportunity to the petitioner. We make it clear that the order that may be passed by the respondent No.2 should be a reasoned order dealing with the grounds and the issues raised by the petitioner. Such order should be passed preferably within a period of three month from the date of submission of copy of this order by the petitioner.

3. After this Court remitted the matter to the respondent no.2 with a direction to pass a fresh order strictly in accordance with law, the order impugned in the present writ­application came to be passed dated 11 th November, 2020.

4. Mr. Soparkar, the learned senior counsel has raised manifold contentions questioning the legality and validity of the impugned order passed by the respondent no.2 herein. We were quite reluctant to entertain this writ­application as the writ­applicant has an alternative remedy of filing a statutory appeal under Section­73 of the GVAT Act 2003. However, keeping this aspect open to be agitated by the other­ side, we have decided to look into the matter, more particularly, having regard to the fact that a direct decision of this High Court applicable to the present case rendered in Tax Appeal No.349 of 2016 decided on 22nd April 2016 has been completely ignored or we may rather say not dealt with appropriately. Mr. Soparkar invited our attention to the observation made in paragraphs­7 and 8 of the judgment rendered in the Tax Appeal

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No.349 of 2016. We quote the observations:­

7. Thus, what is held in the above decisions is that the amounts collected by the dealers under a statutory obligation, cannot be a part of their taxable turnover. Therefore, ordinarily, the purchase price would not include the value added tax component which the seller is under a statutory obligation to collect from the purchaser. Nonetheless, on a plain reading of the definition of "purchase price" as defined under section 2(18) of the GVAT Act, it is clear that it is an inclusive definition. When a definition is inclusive, it may bring within its fold certain matters which ordinarily would not fall within its ambit. As can be seen from the definition of "purchase price", it is an inclusive definition which refers to certain kinds of duties leviable under certain statutes. As a necessary corollary, therefore, it follows that had it been the intention of the legislature to include the value added tax paid on the purchase of goods, it would have formed part of the definition. Assuming that the definition of purchase price is exhaustive and would include the statutory taxes and duties, in that case, there was no necessity for including specific taxes/duties like duties under the Central Excise Tariff Act and the Customs Act. The legislative intent is, therefore, clear, that is, to include only the duties paid under the Central Excise Tariff Act and the Customs Act within the ambit of "purchase price" as defined under section 2(18) of the GVAT Act.

8. When the word "includes" is used in a definition as in the case of section 2(18) of the GVAT Act, it is clear that the legislature does not intend to restrict the definition; it makes the definition enumerative and not exhaustive, that is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within the term certain matters which in its ordinary meaning it may or may not comprise. Inclusion of the words "duties levied or leviable under the Central Excise Tariff Act, 1985 or the Customs Act, 1962" is an inherent indicator of the legislative intent to include only those duties/taxes within the purview of the expression "purchase price". Therefore, the intention of the legislature to exclude value added tax from the ambit of purchase price is clear, as otherwise, the same would also have found place in the categories enumerated thereunder. The Tribunal in the impugned order, on a conjoint reading of the definition of "purchase price" in sub­section (18) of section 2, turnover of purchases in sub­section (32) of section 2 of the Act and section 11 of the Act, was of the view that the tax collected under the Value Added Tax Act is not includible in the turnover of purchases, though it covers other duties as leviable under different Acts. In the opinion of this court, the view adopted by the Tribunal is in consonance with the construction of section 2(18) as discussed herein­above. Since the interpretation of "purchase price" as defined under section 2(18) of the Act is the foundation for interpretation of the expressions "turnover of

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purchases" and "taxable turnover", once it is held that the purchase price does not include the value added tax component, it follows that calculation of input tax credit under section 11(3)(b) of the GVAT Act is also required to be made by excluding the value added tax component from the total turnover of the dealer.

5. On cursory perusal of the judgment of this Court in the case of M/s. Ambuja Cement Ltd. (Supra), it appears that the amounts collected by the dealers under a statutory obligation, cannot be a part of their taxable turnover. In such circumstances, Mr. Soparkar, the learned senior counsel has vehemently submitted that the taxable turnover of sale would not include the amount of service tax separately collected by the petitioner­assessee. It is further submitted that none of the other legal contentions raised before the respondent no.2 have been dealt with appropriately in the impugned order.

6. Let Notice be issued to the respondents returnable on 25/02/2021. Till the next date of hearing, let there be an ad­interim relief in terms of Paragraph­9(D)(i) and 9(D)(ii). The respondents may be served directly through E­mail.

One copy of the entire paper­book shall be furnished at the earliest to Mr. Chintan Dave, the learned AGP so that by next date of hearing, the learned AGP can obtain necessary instructions in the matter.

(J. B. PARDIWALA, J)

(ILESH J. VORA,J) A. B. VAGHELA