In Brief
Reliance Industries, a polymer and chemical manufacturer, purchased furnace oil, natural gas, and light diesel oil used as fuel in manufacturing. These inputs were subject to VAT. After manufacture, the finished goods were transferred by Reliance to branches outside Gujarat, where they were sold. The dispute concerned how much tax credit reduction applied under the Value Added Tax Act: whether the 4% reduction limit applied once or twice when goods fell under both provisions for raw materials dispatched outside the State and fuels used in manufacture. The Supreme Court held that the 4% reduction applies separately under each applicable provision when goods satisfy both conditions, though the reduction cannot exceed the actual credit paid (4% for furnace oil, but 8% total—4% under each provision—for other fuels taxed at 12.5%)."
The lawyer headnote and full judgment text are available to registered users.