Court observed that ‘if component of increase in rates of petroleum ceases to exist, no benefit can be favoured under provision to Section 2(1) (zd) of Delhi VAT Act, 2004
Civil Appeal No. 5103 of 2016
Bench: Chief Justice of India T. S. Thakur; Justice Uday Umesh Lalit
Case Brief: In the present matter, a bunch of appeals were preferred by the appellants challenging the correctness of the common judgement and order which was passed by the High court of Delhi in Sales Tax Appeal and other connected matters. Many of the appeals filed before the High Court were preferred by the Petroleum companies under section 81 of the Delhi Value Added Tax Act, 2004. It was in the year 2006, the rates of petrol and high speed diesel were increased by Rs. 4 and Rs. 2 respectively and this was also to result in increase of Value added Tax. However, Government of National Capital Territory of Delhi decided to offer relief to the customers. When, appellant oil companies filed their VAT returns, then they claimed the benefits of the continued operation of proviso to section 2(1) (zd) of the Act, as they were to be permitted to recover VAT only on the amount of sale price currently charged, as reduced by amounts of Rs. 4 per litre on Petrol and Rs. 2 per litre on High Speed Diesel. In different terms, even after the partial roll back and complete roll back, the appellants continued to deduct amounts of Rs. 4 per litre on Petrol and Rs. 2 per litre on High Speed diesel from prevailing sale price and collected VAT in respect of sale price so reduced. However, disagreed Revenue issued notices of default under section 32 of the Act against appellants and called upon the appellants to pay VAT and Penalty. Appellant’s objection was rejected by Additional Commissioner III, Department of Trade and Taxes, in 2008. Moreover, their appeal was also rejected by the Appellate Tribunal, however, penalties were set aside. High Court also dismissed appeals of appellants and opined that when there is a partial roll back and complete roll back, the benefit of proviso to section 2(1)(zd) ceased to be partly or fully applicable.
Thus, now this bench found that the said proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment and incorporation. This bench also observed that there was an idea behind method so adopted that to grant benefit only in respect of that element of VAT respecting increase in rates and not beyond, and if such component of increase ceased to be in existence, then benefit of proviso also ceased to be in operation. Thus, the decision of High Court and Appellate Authority affirmed and appeals were dismissed.
Read the Judgement: Indo Burma Petroleum Corp. Ltd Vs. Commissioner Vat Delhi & Ors