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2014 (7) TMI 154 - KARNATAKA HIGH COURTValuation - works contract of construction - Deduction of land cost - Whether on the facts and in the circumstances of the case and in law the Tribunal is justified in giving a finding that deducting the value of land from the total receipt of the builder is impermissible, but only value of the transfer of property in goods has to be considered for the purpose of assessment by adding G.P., as the same is against provisions of law - Held that:- State legislatures lack legislative power to levy tax on the transfer of immovable property under Entry 54 of List II of the Seventh Schedule. However, the States do have competence to levy sales tax on the sale of goods in an agreement of sale of flat which also has a component of a deemed sale of goods. Aspects theory though does not allow the State legislature to entrench upon the Union List and tax services by including the cost of such service in the value of goods but that does not detract the State to tax the sale of goods element involved in the execution of works contract in a composite contract like contract for construction of building and sale of a flat therein. Decision in the case of Larsen & Toubro Ltd. v. State of Karnataka [2013 (9) TMI 853 - SUPREME COURT] followed - developer has paid VAT/Sales Tax on the entire material cost that was used for construction of the building and in the present case, the only question is deduction of land cost. - Revenue, petitioner, if they find it necessary to verify correctness of the statement and if they find it incorrect, they may take appropriate steps against the assessee in accordance with law. - Decided in favour of assessee.
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