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M/s Supertech Ltd. Noida Versus The Commissioner, Commercial Tax, U.P. Lucknow

2017 (1) TMI 688 - ALLAHABAD HIGH COURT

Works contract - demand of tax on in respect of goods utilized for construction of flats - reliance was placed in the case of K. Raheja Development Corporation Vs. State of Karnataka, [2005 (5) TMI 7 - Supreme Court], as well as judgment in M/S. Larsen and Toubro Limited and another Vs. State of Karnataka and another [2013 (9) TMI 853 - SUPREME COURT], to demand tax. - Held that: - the ownership of land is with the builder itself, and there is no development agreement entered into by the bu .....

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into existence. The Tribunal being the highest Court of fact was expected to have examined the nature of transaction itself, only after analyzing the clauses of agreement entered into between the assessee and prospective allottee, a finding of works contract could have been returned. - It seems that Tribunal did not deal with the factual issues relating to transaction itself, as it was under the belief that the ratio of law laid down in K. Raheja Development Corporation as well as M/S. Lars .....

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t liable to be sustained. - Order of Tribunal do not sustain - matter on remand. - Sales/Trade Tax Revision No. 2, 3 of 2017 - Dated:- 6-1-2017 - Hon'ble Ashwani Kumar Mishra, J. For the Applicant : Suyash Agarwal,Sri Rakesh Ranjan Agarwal For the Opposite Party : C.S.C. ORDER 1. These two revisions have been filed under Section 58 of the U.P. Value Added Tax Act, 2008, arising out of assessment proceedings for the year 2010-11 and 2011-12. The assessee company is a developer/builder, .....

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. The department as well as the Tribunal for the purposes of coming to such conclusion have relied upon judment of the Apex Court in K. Raheja Development Corporation Vs. State of Karnataka, reported in 2005 (5) SCC 162, as well as judgment in M/S. Larsen and Toubro Limited and another Vs. State of Karnataka and another, reported in 2013 U.P.T.C. 1277. The Tribunal while affirming demand of tax from the assessee has virtually followed the aforesaid two judgments, in order to hold the revisionist .....

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builders' agreement for the purposes of raising construction with the object of transferring it to the prospective buyers. In the facts of these two cases, it is also noticed that rights in the land were also transferred to the prospective buyers. It is in that context that the Hon'ble Supreme Court has been pleased to hold that the contract for raising construction with object of transferring it to the ultimate purchaser constituted a works contract, so as to attract liability of tax. H .....

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ed in 2012 (1) SCC 656, it is settled that transfer of immovable property can only be by way of registered transfer deed. It is stated that such aspects have clearly been omitted from consideration by Tribunal. Learned counsel further submits that facts and circumstances relating to the transaction between the parties have not been given due consideration by the Tribunal, and there is an apparent failure on part of Tribunal to deal with issues raised and pressed before it, which renders the orde .....

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cumstances of the present case, a works contract had come into existence, and the goods and materials used in connection with such contract were liable to be taxed, in accordance with law. 4. I have heard learned counsel for the parties, and have perused the materials brought on record. 5. The order of Tribunal notices the contentions raised on behalf of assessee, and by the order under challenge holds the assessee liable to payment of tax. The entire discussion and finding contained in the orde .....

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oods and materials used for raising of construction. Second paragraph deals with payment of higher tax on account of alleged profits to be earned on account of transfer of such constructions. In the last paragraph, the Tribunal holds that there was no contract for sale of Earth, and therefore, levy of tax on such count has been held to be bad. 6. The facts, which have given rise to passing of the judgment by the Hon'ble Supreme Court in K. Raheja Development Corporation (supra), have been no .....

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d/or commercial complexes they enter into Agreements of Sale with intended purchasers. The Agreements would provide that on completion of the construction the residential apartments or the commercial complex would be handed over to the purchasers who would get an undivided interest in the land also. The owners of the land would then transfer the ownership directly to the society which is being formed under the Karnataka Ownership Flats (Regulation of Promotion of Construction, Sales, Management .....

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s, is essentially a question of fact, which would depend upon the nature of transaction, resorted to between the parties. The assessee in the facts of the present case had alleged that it was the owner of the land, and that the constructions were raised by it, and at the stage of raising of such construction, no right is created in prospective purchaser either over the land or the constructions. Various clauses of the agreement entered into by the builder with the allottee were referred to befor .....

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returned. It is to be noticed that there existed difference in the facts of the present case viz-a-viz K. Raheja Development Corporation (supra) and M/S. Larsen and Toubro Limited (supra). It was also observed therein that rights were also created in respect of immovable property in favour of the allottees. In the facts of the present case, the revisionist's plea is that no right in the immovable property is created in favour of allottee, and it was otherwise impermissible in view of the ra .....

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