TMI Blog2013 (10) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... , ALLAHABAD] - Decided against assessee. - Writ Tax No. - 874 of 2013 - - - Dated:- 7-10-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Petitioner : Ashok Kumar, Praveen Kumar For the Respondent : C.S.C. ORDER 1. We have heard Shri Ashok Kumar and Shri Praveen Kumar for the petitioner. Shri C.B. Tripathi, Special Standing Counsel appears for the State respondents. 2. In this writ petition filed by petitioner carrying on business as builder/developer constructing 240 flats, provisional assessment order dated 21.9.2013 passed by the Dy Commissioner, Commercial Tax, Sector-3, NOIDA for June 2013 under the U.P. Value Added Tax Act, 2008, for levying commercial tax on the sale of goods under the works contracts/ agreements in constructions as defined in Clause (m) of Section 2 read with Section 3F of the Act has been challenged on the ground that in such building contracts/ agreements no sale of goods is involved, and that what is sold or transferred is the constructed flats/ houses/ apartments as chattels. 3. Earlier similar writ petitions were entertained on the ground that in M/s Larsen Toubro Limited another vs. State of Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distinction between contract for sale of goods and contract for work (or service) is virtually diminished. (vi) The dominant nature test has no application and the traditional decisions which have held that the substance of the contract must be seen have lost their significance where transactions are of the nature contemplated in Article 366(29-A). Even if the dominant intention of the contract is not to transfer the property in goods and rather it is rendering of service or the ultimate transaction is transfer of immovable property, then also it is open to the States to levy sales tax on the materials used in such contract if such contract otherwise has elements of works contract. The enforceability test is also not determinative. (vii) A transfer of property in goods under clause 29-A(b) of Article 366 is deemed to be a sale of the goods involved in the execution of a works contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. (viii) Even in a single and indivisible works contract, by virtue of the legal fiction introduced by Article 366(29-A)(b), there is a deemed sale of goods which are involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment or other valuable consideration. (iv) The developers had undertaken to build for the prospective purchaser. (v) Such construction/development was to be on payment of a price in various installments set out in the agreement. (vi) The developers were not the owners. They claimed lien on the property. They had right to terminate the agreement and dispose of the unit if a breach was committed by the purchaser. A clause like this does not mean that the agreement ceases to be ?works contract?. So long as there is no termination, the construction is for and on behalf of the purchaser and it remains a ?works contract?. (vii) If there is a termination and a particular unit is not resold but retained by the developer, there would be no works contract to that extent. (viii) If the agreement is entered into after the flat or unit is already constructed then there would be no works contract. But, so long as the agreement is entered into before the construction is complete it would be works contract. 114. In Article 366(29-A)(b), the term ?works contract? covers all genre of works contract and it is not limited to one specie of the contract. In Raheja Development1, the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was constructing the flats/apartments not for and on behalf of prospective allottees or otherwise. The payment schedule would not alter the transaction. The right, title and interest in the construction would continue to remain with the petitioner. The Court held in the facts of that case that it cannot be said that the constructions were undertaken for or on behalf of the prospective allottees and therefore, the constructions in question undertaken by the petitioner would not fall under clause (m) of Section 2 read with Section 3F of the Act, and are outside the purview of the provisions of the Act and they cannot be subjected to tax under the Act and that the action in imposing tax on such constructions treating them to be works contract was wholly without jurisdiction. The Court set aside the assessment order passed by the Assistant Commissioner, Trade Tax, Sector-I, Noida in so far as they relate to imposition of tax on construction of apartments/houses/flats and other construction in question. The Court held that the assessment order could not be sustained. 6. The State of UP filed Special Leave to Appeal (Civil) ..../2007 CC 11480-11481/2007 (State of UP another vs. M/ ..... 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