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2015 (5) TMI 882

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..... ccordance with the express provisions under the rules, there is no warrant for confining the value as sought to be submitted by the assessee. It is open for the legislature to adopt any basis for determining the value of a taxable article. The measure for assessing the levy need not correspond completely to the nature of levy, and no fault can be found with the measure so long as it bears nexus with the charge. While MVAT is a levy on transfer of goods in a works contracts inter alia of the nature of construction and buildings, the stage of collection need not, in point of time coincide with transfer of goods. The MVAT is chargeable with reference to the value of goods being transferred in a works contract and the value is to be determined in express terms of the provisions. The Courts have always regarded and recognized that measure employed for assessing tax must not be confused with the nature of tax. There is clear distinction between subject matter of tax and the standard by which amount of tax is measured. The two elements are described as subject of tax and measure of tax. The levy of tax is defined by its nature and the measure of tax may be assessed by its own standard. .....

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..... fication dated January 29, 2014, issued by Finance Department of State of Maharashtra, pursuant to proviso to sub section (4) of section 83 of the Maharashtra Value Added Tax, 2002 (Maharashtra Act of IX of 2005) (Hereinafter, for brevity referred to as MVAT Act ) and Trade Circulars, one dated February 21, 2014 bearing No. 7 T of 2014 issued by Joint Commissioner of Sales Tax and another dated April 17, 2014, bearing No. 12 T of 2014 issued by the Commissioner of Sales Tax, Maharashtra State pursuant to provisions of MVAT Act. 2. The petitioners inter alia request to issue writ of certiorari or an order in the nature of writ of certiorari, quashing and setting aside aforesaid notification dated January 29, 2014 and Trade Circulars dated 21st February, 2014 bearing No. 7 T of 2014 and Trade Circular dated 17th April, 2014 bearing No. 12 T of 2014 and to process applications for determination, as directed to be done in paragraph No. 34 of High Court's order dated 10th April, 2012 in Writ Petition No. 2022 of 2007 and other petitions as well as paragraph No. 121 of Supreme Court's decision dated 26th September, 2013 and the order of the High Court dated 30th October, 2012 .....

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..... extent it is relatable to the supply of said labour and services: Provided that where the contractor has not maintained accounts which enable a proper evaluation of the different deductions as above or whether the Commissioner finds that the accounts maintained by the contractor are not sufficiently clear or intelligible, the contractor or, as the case may be, the Commissioner may in lieu of the deductions as above provide a lump sum deduction as provided in the Table below and determine accordingly the sale price of the goods at the time of said transfer of property. Table Sr. No. Type of Works Contract Amount to be deducted from the contract price (expressed as a percentage of the contract price) (1) (2) (3) 1 Installation of plant and machinery Fifteen per cent 2 Installation of air conditioners and air coolers Ten per cent 3 Installation of elevators (lifts) and escalators Fifteen per cent 4 .....

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..... nd shall be determined in accordance with the guidelines appended to the Annual Statement of Rates prepared under the provisions of the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995, as applicable on the 1st January of the year in which the agreement to sell the property is registered. Provided that, deduction towards cost of land under this sub-rule shall not exceed 70% of the agreement value. (2) The value of goods so arrived at under sub-rule (1) shall, for the purposes of levy of tax, be the sale price or, as the case may be, the purchase price relating to the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. 4. While there is no amendment to rule 58 (1), by notification dated January 29, 2014, amended rule 58 (1A), rules 58 (1B), (1C) and Rule 58 (2) are brought in operation, which read thus - 58 (1A) In case of construction contract, where along with the immovable property, the land or, as the case may be, interest in the land, underlying the immovable property is to be conveyed, and the property in the goods (whether as goods or in some other form) involved in the ex .....

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..... After the completion of 100% RCC framework to the Occupancy Certificate. 55% (e) After the Occupancy Certificate NIL % (b) For determining the value of goods as per the Table of clause (a), it shall be necessary for the dealer to furnish a certificate from the Local or Planning Authority certifying the date of completion of the stages referred above and where such authority does not have a procedure for providing such certificate then such certificate from a registered RCC consultant. (1C) If the dealer fails to establish the stage during which the agreement with the purchaser is entered, then the entire value of goods as determined after deductions under sub-rules (1) and (1A) from the value of the entire contract, shall be taxable. (2) The value of goods so arrived at under sub rule (1), (1A) or, as the case may be, under sub-rule (1B) shall, for the purposes of levy of tax, be the sale price or, as the case may be, the purchase price relating to the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. 5. Gr .....

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..... on higher side and it is unfair and unconstitutional. The percentage prescribed is not in tune with ground realities and technical considerations. According to the petitioners, though prescription of table has been modelled on recommendations of Public Works Department, the same is insufficient and would not be applicable to the cases of developers. There is huge difference in the contracts with the Public Works Department and the nature of work of the developer, viz., Public Works Department contract provides for escalation, which is not the case with the developer. It is further contended that presumptions underlying the table under rule 58 (1B) that work is done on site as per stage given, yet it would not necessarily represent the way construction is carried out, in stages and in the sequences, for, it may be combination of various stages or activities may be simultaneous and as such, the table would not be able to give correct determination of value of work done at the time of entering into an agreement. 7. In the affidavit in reply by respondents, it is referred to that insertion of sub Rule (1A) in Rule 58 of the MVAT Rules, with effect from 20th June, 2006 under Maharash .....

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..... department, stages and percentages have been introduced in Rule 58 (1B). It is, thus, submitted that the Rule clearly has nexus with the tax sought to be levied, keeping in mind the principles laid down by the Supreme Court and cannot be said to be arbitrary. 10. Rule 58 (1B), therefore, clarifies the scope of Rule 58 (1A) and ensures that it is the value of the goods only after the works contract is entered into is being levied tax. The rules have nexus to the Supreme Court decision. 11. In the reply, respondent No.2 Joint Commissioner of Sales Tax, Maharashtra State Mumbai purports to point out that proviso to Rule 58 (1) has been incorporated in accordance with the observations of the Supreme Court in Gannon Dunkerley II, by providing for a lump sum deduction in lieu of individual deductions where the contractor has not maintained proper accounts or the accounts are found by the assessing authority to be unworthy of credence. 12. It is submitted that the amendments to Rule 58 were called for by the dealers themselves, who have made representations to the Department seeking such changes. Representatives of the State have also met with the dealers and developers and have .....

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..... senior advocate leading the arguments with other appearing advocates, submits that the petitions predominantly challenge Rule 58 (1A) and Trade Circular No. 7 T of 2014 as those are in express conflict with the dictum under the decision of the Supreme Court in Larsen and Toubro Ltd Another V. State of Karnataka Anr (2014) 1 SCC 708. According to him, paragraphs No. 115 and 124 of said judgment play pivotal role in the matter. Paragraphs No. 115 and 124 of said judgments read thus - 115. It may, however, be clarified that activity of construction undertaking by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government. 124. The value of the goods which can constitute the measure of the levy of the tax has to be the value of the goods at the time of incorporation of goods in the works even though property in goods passes later. Taxing the sale of goods element in a works contract is permissible even after incorporation of goods provided tax is .....

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..... spite the deductions as are allowed under the provisions and as such, provides for refund. This being so, Rule 58 (1A) does not obviate value of immovable property being taxed. It is contrary to direction of the Apex Court in paragraph No. 124 of the judgment in Larsen and Toubro's case. According to learned advocates, the provision for refund of excess value of land proved by the assessee would not save Rule 58 (1A) being unconstitutional, for, (1957) 8 STC, 561 A. V. Fernandez V. State of Kerala applied by five Judges Bench in Bhawani Cotton Mills Ltd V. State of Pubjab (1967) 20 STC 290 have held that the legislature cannot impose tax merely on the justification that refund of the same may be provided at a later stage. Learned senior advocate relies on an extract from said judgment, which is reproduced herein below - If a person is not liable for payment of tax at all, at any time, the collection of a tax from him, with a possible contingency of refund at a later stage, will not make the original levy valid. 18. According to learned advocates, therefore, proviso to Rule 58 (1A) making the provision for refund would not cure invalidity of the Rule, insofar as it r .....

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..... provide for valuation by any other statutory authority. 22. Learned advocates go on to submit that Rule 58 (1B) fictionally ascertains the value of goods assumed to be transferred in execution of a works contract, depending on the stage of construction. However, according to them, the tax cannot be levied on fictionally prearranged pattern applicable to all cases alike. For said purpose they relied on Pandit Banarsi Das V. State of Madhya Pradesh (1955) 6 STC 93. Learned senior advocate submits that it is price of goods deemed to be sold, which shall be levied and not on the basis of slabs, which are prone to error. (It has to be noted that the citation is prior to the amendments, to Article 366 of the Constitution of India giving allowance to inclusion of works contract). It is being contended that the stages consider only 5% incorporation of goods in the construction till plinth level whereas the purchaser has to pay tax on 95% of the contract value, after deductions and since according to them value of cement, steel, etc. used in the construction up to plinth level is likely to be far in excess of 5% of goods used in the entire project. As sales tax is a tax on each transa .....

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..... ng regard to said case, as had been done in that case, seeks indulgence in the present case to reconsider the matter afresh. She further relies on (1985) 1 SCC 641 Indian Express Newspapers V Union of India . This was a case relating to freedom of press, and was considered that it is court's duty to protect and on background, the reasonableness of imposition of import duty and auxiliary duty was being considered. She contends that incidence at times tends to be on the land or interest in the same and as such, not in conformity with statutory and constitutional requirements and tends to be arbitrary. She also relies on (2006) 4 SCC 517 State of T. N. V. P. Krshnamurthy . 26. The Advocate General Mr. Sunil V. Manohar leading the arguments for the State of Maharashtra along with other appearing counsel for the respondents submits that while examining the constitutional validity of the law, fundamentally pith and substance of the Act and provisions have to be looked into. The provisions are introduced with basic object and intention to levy tax on transfer of goods in works contract including the works contract involving construction of building and purchase of the flat / tene .....

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..... he category of a tax on a man's financial position, his status taken as a whole and includes what may not properly be comprised under the term 'property' and at the same time ought not to escape assessment. This quotation finds place in the judgment of Malik C.J. in the Full Bench decision in 10 District Board of Farrukhabad. (supra) The formulation, which the learned Chief Justice would appear to have extracted from another source, since he has put it within quotes, is in similar terms as that of this Court in Pandit Ram Narain v. The State of U.P. In that case an assessee challenged his liability to pay the tax on circumstances and property under section 14 (1) (f) of the U. P. Town Areas Act, 1914 on the ground that he did not reside within the jurisdiction of the Town Area Committee of Karhal and that Rule 3 framed under section 39 (2) of the Act was invalid. This Court, after referring approvingly to the decision in District Board of Farrukhabad, (supra) particularly to the statement therein that the name given to a tax did not matter and that what had to be considered was the pith and substance of it, observed: A tax on 'circumstances and property' is .....

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..... ay advance tax are not anything new and the impugned provisions are akin to that. This is permissible and the standard by which the amount of tax is measured, being the purchase price, will not in any way alter the nature and basis of the levy viz., that the tax imposed is a tax on income. It cannot be liable as a tax on purchase of goods. Considered in the light of the practical difficulties envisaged by the Revenue to locate the persons and to collect the tax in certain trades, if the legislature in its wisdom thought that it will facilitate the collection of the tax due from such specified traders on a presumptive basis , there is nothing in the said legislative measure to offend Article 14 of the Constitution. Hence, it cannot be held that section 44-AC read with section 206-C is wholly hit by Article 14 of the Constitution of India. 32. He refers to following observations in said judgment - We should also bear in mind the principles laid down in a more recent decision in Ganga Sugar Corporation Ltd. vs. State of U.P. and others (AIR 1980 SC 286), wherein it was held thus:- Article 14, a great right by any canon, by its promiscuous forensic misuse, despite the .....

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..... considerations of executive pragmatism, the judicature cannot rush in where even the legislature warily treads. 33. While considering the challenge in the writ petitions, it would be necessary to refer to preceding litigation. Amendments to section 2 (24) of the Maharashtra Value Added Tax Act, 2002 in 2006 and 2007, questioning constitutional validity on the ground that the amendments transgress the limitations contained in Article 366 (29A) (b) of the Constitution, were challenged in writ petition No. 2022 of 2007 and other companion writ petitions on the premise that State Legislature purported to bring within ambit and purview of the expression sale under MVAT, an agreement for building and construction of immovable property which is not a works contract and questioned competence of the State Legislature to legislate. As a result, the petitioners contended that the amendments seek to impose a tax on a transaction, which would not be sale of goods within the meaning of Entry 54 of the State List under Seventh Schedule to the Constitution and as such, contravene the limitations on legislative powers under Article 246 (3) of the Constitution. Consequently, challenge was al .....

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..... that Sub Rule (1A) of Rule 58 of the MVAT Rules is an arbitrary Rule. 38. The Division Bench, while turning down challenge to Rule 58 (1A) as was then subsisting, observed in paragraph No. 35 thus - 35. The challenge to Rule 58(1A), may now be considered. The Rule has provided that in the case of construction contracts where the immovable property, land or as the case may be, interest therein is to be conveyed and the property involved in the execution of the construction contract is also transferred, it is the latter component which is brought to tax. The value of the goods at the time of transfer is to be calculated after making the deductions which are specified under sub-rule (1). The judgment in the second Gannon Dunkerley specifies the nature of such deductions which can be made from the entire value of the works contracts. This was permitted to the States as a convenient mode for determining the value of the goods in the execution of the works contract. Sub-rule (1A) stipulates that the cost shall be agreement value. Similarly, the cost of the land is required to be excluded from the total determined in accordance with the guidelines appended to the Annual Statement of .....

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..... at in order to determine value of goods involved in execution of works contract, it would be open to the States to adopt a convenient mode for such determination by taking value of works contract as a whole and to deduct therefrom cost of labour and services rendered by the contractor during the course of execution of works contract. The Division Bench has also further adverted to that the Supreme Court has also emphasized that there could be cases where the contractor has not maintained proper accounts or the accounts are not found to be worthy of credence by the assessing authority. In such cases, it would be permissible for such legislation to prescribe a formula by fixing a particular percentage of the value of works contract and to allow deduction of amount, which is determined from the value of works contract for the purpose of determining value of goods involved in its execution with a rider that however, the values of deductions should not differ appreciably in the normal circumstances. 42. Later a Division Bench of this Court (Dr. D. Y. Chandrachud and R. G. Ketkar, JJ) under judgment and order dated 30th October, 2012 in writ petition (L) No. 2440 of 2012 and writ peti .....

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..... he absence of rule 1BB it would not have been objectionable, nor would there be any legal impediment, to adopt the mode of valuation embodied in Rule 1BB, namely, the purchase value. The Supreme Court held that the rule was intended to impart uniformity in valuations and to avoid vagaries and disparities resulting from the application of different modes of valuation in different cases where the nature of the property is similar. The Supreme Court held that rule 1BB was essentially a rule of evidence as to the choice of one of the accepted methods of valuation. 44. This court had then noted that the sub rule (1A) of Rule 58 of MVAT Rules was introduced effective from 20th June, 2006 dealing with a category of construction contracts in which along with immovable property, the land or interest in land is to be conveyed and the property in goods involved is also transferred to the purchaser. Rule 58 (1A) stipulates that the value of the goods transferred shall be calculated after making deductions under sub-rule (1) and similarly, cost of land has to be deducted from the total agreement value. It was further considered that in so far as the cost of the land is concerned, Rule 58 (1A .....

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..... nce with law, observing further that determination by the assessing officer of the objection by the assessee is also amenable to challenge before appropriate forum, provided under the Act. 47. The decision of the Division Bench on 12th April, 2012 in writ petition No. 2022 of 2007 and other connected writ petitions, had been taken to the Supreme Court, by the aggrieved petitioners. The Supreme Court has dismissed the challenge to amendment to section 2 (24) of the MVAT Act and rule 58 (1A) of MVAT Rules and had approved the decision rendered by this Court on 12th April, 2012 while deciding Larsen and Tourbo case (2014) 1 SCC 708, observing thus - 123. Sub-rule (1A) was inserted into Rule 58 by a notification dated 01.06.2009. As a matter of fact, Rule 58(1) of the MVAT Rules provides that the value of the goods at the time of the transfer of the property in goods involved in the execution of a works contract may be determined by effecting certain deductions from the value of the entire contract insofar as the amounts relating to deductions pertain to the said works contract. The challenge was laid to Rule 58(1A) of the MVAT Rules before the Bombay High Court. The Division Be .....

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..... considered in the same that there are several cases in which measure of this nature has been held to be in tune with the constitutional mandate. The Division Bench has reproduced paragraphs No. 28 and 33 from the decision in case of Laghu Udyog Bharati Anr. V. Union of India and Others (1999) 6 SCC 418, which read thus - 28. There is a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. The distinction is important but is apt to be confused. Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery. There is a further distinction between the objects of taxation in our constitutional scheme. The object of tax may be an article or substance such as a tax on land and buildings under Entry 49 of List II, or a tax on animals and boats under Entry 58 List II or on a taxable event such as manufacture of goods under Entry 84 of List-I, import or export of goods under Entry 83 of List-I, entry of goods under Entry 52 of List II or sale of goods under Entry 54 List II to name a few. Theoretically, of course, as we have held in Godfrey Phillips Ind .....

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..... d 135 of the decision in case of State of West Bengal Anr. V. Kesoram Industries Limited Others AIR 2005 SC 1646, which read thus- 33. We now proceed to enter a deeper dimension in the field of tax legislation by considering the problem of devising the measure of taxation. This aspect has been dealt with in detail in Union of India and others v. Bombay Tyre International Ltd., (1983) 4 SCC 210. Tracing the principles from the leading authority of Re.: a reference under the Government of Ireland Act 1920 and Section 3 of the Finance Act (Northern Ireland) 1934, (1936) A.C. 352, passing through Rella Ram v. Province of East Punjab, 1948 FCR 207, and treading through the law as it has developed through judicial pronouncements one after the other, this Court has made subtle observations therein. It has been long recognized that the measure employed for assessing a tax must not be confused with the nature of the tax. A tax has two elements; first, the person, thing or activity on which the tax is imposed, and secondly, the amount of tax. The amount may be measured in many ways; but a distinction between the subject-matter of a tax and the standard by which the amount of tax is .....

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..... ields of taxation covered by Entries 49 and 50 in List II continue to remain with State Legislatures in spite of Union having enacted laws by reference to Entries 52, 53, 54 in List I. It is for the Union to legislate and impose limitations on State's otherwise plenary power to levy taxes on mineral rights or taxes on lands (including mineral bearing lands) by reference to Entry 50 and 49 in List II and lay down the limitations on State's power, if it chooses to do so, and also to define the extent and sweep of such limitations. (5) The Entries in List I and List II must be so construed as to avoid any conflict. If there is no conflict, an occasion for deriving assistance from non-obstante clause subject to does not arise. If there is conflict, the correct approach is to find an answer to three questions step by step as under: One - Is still possible to effect reconciliation between two Entries so as to avoid conflict and overlapping? Two - In which Entry the impugned legislation falls by finding out the pith and substance of the legislation? and Three - Having determined the field of legislation wherein the impugned legislation falls by applying doctrine of pith .....

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..... ciples to be applied for determining the larger issues, in said judgment paragraph No. 35 of Gujarat Ambuja Cements Limited Anr. V Union of India and Anr reported in AIR 2005 SC 3020, was reproduced which may also be relevant for the present matters, which reads thus - 35. The point at which the collection of the tax is to be made is a question of legislative convenience and part of the machinery for realization and recovery of the tax. The manner of the collection has been described as an accident of administration; it is not of the essence of the duty . It will not change and does not affect the essential nature of the tax. Subject to the legislative competence of the Taxing Authority a duty can be imposed at the stage which the authority finds to be convenient and the most effective whatever stage it may be. The Central Government is therefore legally competent to evolve a suitable machinery for collection of the service tax subject to the maintenance of a rational connection between the tax and the person on whom it is imposed. By Sections 116 and 117 of the Finance Act, 2000, the tax is sought to be levied from the recipients of the services. They cannot claim that th .....

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..... e value and it has been observed thus - For the purpose of computation or calculation of the duty liability of the parties like the petitioners there is nothing erroneous if the Legislature takes into consideration and account the price at which the principal manufacturer sells the product or goods to the buyer. That is nothing but a measure of the tax. In other words, that is how the tax has to be computed and measured. Such a provision does not alter or change the character or nature of the duty or tax. The tax or duty remains a tax or duty on production or manufacture of goods. Insofar as its measure is concerned, the Legislature thought it fit and in its wisdom to quantify the duty liability of parties like the petitioners on the price which the finished product or goods command in the market. That would be the true measure of the tax according to the Legislature . 57. The Supreme Court in case the of Union of India Others V. Bombay Tyre International Ltd (1984) 1 SCC 467 = 1983 (14) ELT 1896 (SC) has comprehensively and elaborately dealt with various aspects involved in respect of taxing statutes which largely hold the field. The Supreme Court in said case has obser .....

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..... ject of tax is determined in that context. When that is so, the fundamental basis on which arguments as have been advanced and raised on behalf of the petitioners does not survive. We may add that whether any further deductions can be claimed beyond those already mentioned, may depend on the nature of claims in the case of a particular assessee adducing evidence in a proper case and at proper stage. In such cases, it will be for the revenue to determine on the evidence before it and what should be the cost to be taken as value of subject of tax for the purpose of MVAT. 62. This Court is to consider validity of provisions valuing taxable goods for the purpose of charging duty. While enacting a measure to serve as a standard as levy, the legislation may not contour it along with the lines which spell out the character of the levy itself. Viewed from this standpoint, it is not possible to accept the contention that because the levy of MVAT is a levy on transfer of goods in a works contract, the value of goods must be limited to cost plus profit. The broader based standard may be adopted and would be within authority and power of legislation. A standard which maintains a nexus with .....

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..... f the factors referred to by the petitioners is a matter pertaining to assessment on ascertainment of the value of subject of tax and not to the nature of duty. The standard adopted by the legislature for determining value may possess a broader base than that on which the charging provision proceeds. The value of goods determined under the new provisions may also vary according to certain circumstances. 66. It was open for the legislature to specify measure for assessing the levy. The other important considerations are certainty and convenience in the administration of levy from the view point of the assessee and the revenue. The legislation has done so. Both in the earlier / older rule 58 (1A) and the amended Rule 58 (1A), the value of subject of tax arrived at represents the measure. Value of the subject of tax has to be computed with reference to the rules. 67. The amended provisions define a measure of charge and the standard adopted by the legislature for determining value which may require / press for broader base than that on which the charging proceeds. By now, it is well settled that stage of collection need not in point of time synchronize with the transfer of prope .....

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..... sessed by its own standard. A standard may be adopted as the measure of levy and may indicate nature of the tax but would not necessarily determine it. Though the measure of tax is furnished by the method referred to under Rule 58, it does not cease to be a tax on transfer of goods in a works contract. The Supreme Court and the other High Courts have approved and upheld the measure of levy and action under a legislation with the annual value of place prescribing a uniform formula for determination. 70. As referred to above, in earlier challenge, the division bench of this court has considered that Rule 58 (1A) provides that where the construction contract involves transfer of interest in immovable property - land, value of goods in execution of works contract shall be calculated after making deductions under sub rule (1). To put it in other words, where in construction contracts element of transfer of interest in land is involved, Rule 58 (1A) provides for mandatory method of computing the assessable value. The Circular of February 21, 2014 clarifies what has been provided in rules and as such, is not ultra vires. The circulars cannot be said to have travelled beyond the boundar .....

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..... nconstitutional. Trade Circular No. 12 T of 2014 dated 17th April, 2014 comprises responses to some frequently asked questions. The circulars clarify the mandate of statute and do not introduce a condition or restriction not found in the rules or statute. 74. While prescribing the modalities of valuation under rule 58 and particularly under rules 58 (1), 58 (1A) and 58 (1B) of MVAT Rules, the object all along appears to adopt a standard and measure for assessment of subject of tax and the object is neither lost sight of nor is obfuscated. The rules all along have in view and nexus with subject of tax. 75. Allegation with respect to the notifications and Rules being bad for want of previous publication, cannot be sustained in the facts and circumstances of the case, particularly having regard to that the amendments to Rule 58 of the MVAT Rules, have been introduced by the State Government having been satisfied that circumstances exists for immediate action and as such, it had dispensed with the requirement of previous publication. It has come in the reply of the respondents that the notification clarifies that the Government of Maharashtra was satisfied that the circumstances .....

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..... ere in the statutory choice made by the legislature or by its delegate. The court also considered that Rule 58 (1A) mandates how the value of goods involved in execution of a construction contract at the time of transfer of property is to be determined when the contract involves transfer of land or interest therein. 78. The court had considered thus - Plainly, Rule 58 (1A) does not permit the developer to take recourse to a method of computation other than what is specified in the provision. This court, referring to (1994) 210 ITR 886 (SC) Commissioner of Wealth Tax V. Sharvan Kumar Swarup Sons , has observed that the Supreme Court has held that the rule was intended to impart uniformity in valuations and to avoid vagaries and disparities resulting from application of different modes of valuation in different cases where nature of the property is similar and such rules are in the nature of rule of evidence as to the choice of one of the accepted methods of valuation. 79. Judgment reported in (1957) 8 STC, 561 A. V. Fernandez V. State of Kerala and (1967) 20 STC 290 Bhawani Cotton Mills Ltd V. State of Punjab relied on by learned senior advocate, would not hold .....

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..... process, in some cases, if there is any over payment of tax, the provision makes allowance for its refund and would not tantamount to tax on land. Legislature does not intend to levy tax on matters other than as are intended under the enactment. Even in case of undervaluation, after determination, till such time overpayment would be towards the tax on goods so long as land value is not revalued and it would continue to tax on goods up to this time, its nature being MVAT over and in excess on taxable value. Only on redetermination, in a particular case if amount is to be refunded, it cannot be said to be bad for being tax on land. 84. For all aforesaid reasons, we are not in agreement with the petitioners. We are not impressed by the submissions made on behalf of the petitioners that valuation of goods under Rule 58 of the MVAT Rules would not let the proper authority to probe into transactions of land dealings by the developers, depending upon facts and circumstances of and evidence in particular case, as it would be open for the competent authority to make proper inquiry and seek details of the transactions and the price at which the property had been purchased. Investigation a .....

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