Case: Indo Burma Petroleum Corp. Ltd Vs. Commissioner Vat Delhi

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 of penalties. It was observed, as under: ?17?. Tax is to be paid as per Section 4 of the Act on the taxable turnover. Taxable turnover is to be computed as per Section 5 r/w Section 2(1)(zm) of the Act. Section 2(1)zm) talks about the ?sale price?. ?Sale price? is defined by Section 2(1)(zd) as a valuable consideration for any sale including amount of tax payable under the Act. (emphasis in bold) Thus if a State Govt. wants to give relief against the price increased by the Central Government 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 view, the act of the Govt. of NCT of Delhi in introducing the proviso in question, by no stretch of imagination, could goad the appellants to embark upon an exercise in reducing the basic price for calculating the VAT, as argued by the Ld. Counsel for the appellants because simple meaning of this proviso is that oil companies were not required to include the increased component as a part of sale consideration under Section 2(1)(zd) of the Act. When the increased component was not to be a part of 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 appellants that the meaning of this proviso was that appellants shall continue to follow the deduction till another notification was issued which was in fact issued in June 2007 and oil companies stopped taking benefit of the proviso after this notification in June 2007, is without any merit.?12. The appellant-companies being aggrieved in so far as the interpretation placed on the first proviso to Section 2(1)(zd) of the Act was concerned, preferred appeals under Section 81 of the Act before the 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 back respectively. These appeals by special leave challenge the correctness of the decision of the High Court. We have heard Mr. S. Ganesh, learned Senior Advocate in support of the appeals and Mr. Arvind Datar learned Senior Advocate for the respondents. 13. According to the appellants, the benefit in terms of the proviso in question was to the extent of VAT chargeable and payable in respect of the amount of increase and the benefit so quantified must be made available regardless of any variation 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 payable on x-4. 14. In our view, the proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment and incorporation. The idea was to protect the interest of the consumers by giving exemption in respect of enhanced ad valorem VAT payable on account of increase in prices of diesel and petrol from 06.06.2006. On the element of increase no additional ad valorem VAT was payable and according to the proviso the increased component was not to be part of sale consideration. Consequently VAT was not to be charged in respect of such increased component, as per definition of the term ?sale price? which came 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 respecting increase in rates and not beyond. If that component of increase ceased to be in existence, the benefit of proviso also ceased to be in operation.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]g aggrieved in so far as the interpretation placed on the first proviso to Section 2(1)(zd) of the Act was concerned, preferred appeals under Section 81 of the Act before the 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 back respectively. These appeals by special leave challenge the correctness of the decision of the High Court.We have heard Mr. S. Ganesh, learned Senior Advocate in support of the appeals and Mr. Arvind Datar learned Senior Advocate for the respondents.In our view, the proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment and incorporation. The idea was to protect the interest of the consumers by giving exemption in respect of enhanced ad valorem VAT payable on account of increase in prices of diesel and petrol from 06.06.2006. On the element of increase no additional ad valorem VAT was payable and according to the proviso the increased component was not to be part of sale consideration. Consequently VAT was not to be charged in respect of such increased component, as per definition of the term ?sale price? which came 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 respecting increase in rates and not beyond. If that component of increase ceased to be in existence, the benefit of proviso also ceased to be in operation.