2007 (10) TMI 565 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, the Tribunal was right in dismissing the appeal in S.T.A. No. 2601 of 2004 despite knowing that a coordinate Bench of the Tribunal had, in its judgment dated September 11, 2003, recorded a contrary finding in respect of the appeal filed by the very same petitioner for earlier assessment period? Whether, in the facts and circumstances of the case, the Tribunal was justified in rejecting the review petition although it had committed an error apparent on the face of the record by dismissing the appeal in S.T.A. No. 2601 of 2004 by dissenting from the judgment of a coordinate Bench of the Tribunal? Whether, in the facts and circumstances of the case, charges received for creation of common amenities that are not sold to any person but only a right to use thereof is provided, would be liable to tax under the provisions of the Karnataka Sales Tax Act, 1957? Held that - The concurrent findings on fact recorded by the authorities holding that there is sale in favour of the residents as defined under section 2(1)(t) of the KST Act and in terms of the TP Act is perfectly based on valid and cogent reasons and the transfer is for valid consideration. Therefore, the findings of fact recorded in the impugned orders are neither erroneous nor an error in law. Merely because one Member of the Bench of the Tribunal took a different view earlier, the matter need not be referred to larger Bench. Such reference is required under Regulation 54(a)(2) of the Regulations, when a point of law of general importance is involved or when there is conflicting decisions of the members in a case. Such a situation does not exist in the instant case. In the result, the revision petition is devoid of merit and the same is dismissed. All the questions framed do not arise for consideration.

Summary

Issues Involved:
1. Dismissal of appeal by Tribunal despite contrary finding in previous judgment
2. Justification of rejecting review petition by Tribunal
3. Tax liability on charges for creation of common amenities under Karnataka Sales Tax Act

Issue 1: Dismissal of appeal by Tribunal despite contrary finding in previous judgment
The petitioner, engaged in real estate business, received charges for development of amenities in a township. The assessing authority held these charges liable for tax under the Karnataka Sales Tax Act. The petitioner contended that no sale occurred as only easementary rights were provided, not falling under "works contract." The Tribunal upheld the tax liability, rejecting the petitioner's appeals. The petitioner argued that the Tribunal's decision contradicted its earlier judgment. The High Court held that the developmental charges formed part of the sale consideration, with common facilities transferred to buyers, justifying the tax liability. The Court dismissed the revision petition, as the Tribunal's decision was based on valid reasons.

Issue 2: Justification of rejecting review petition by Tribunal
The petitioner challenged the rejection of the review petition, arguing against liability under the Sales Tax Act. The Court upheld the rejection, stating that common facilities provided in the layout were part of the sale consideration, making the tax liability valid. The Court found no errors in the Tribunal's decision, concluding that the review petition rejection was legal and valid. The Court dismissed the revision petition, as the questions raised by the petitioner did not warrant consideration.

Issue 3: Tax liability on charges for creation of common amenities under Karnataka Sales Tax Act
The petitioner contended that charges for common amenities did not constitute a sale under the Sales Tax Act. The Court disagreed, stating that the charges formed part of the sale consideration, with common facilities transferred to buyers. The Court upheld the tax liability, emphasizing that without these facilities, the sites would not be marketable. The Court found the tax liability valid, based on the transfer of common facilities to buyers along with the sale of sites. The Court dismissed the revision petition, as the tax liability was deemed lawful.

In conclusion, the High Court upheld the tax liability on charges for common amenities, dismissing the petitioner's revision petition challenging the Tribunal's decision.