2014 (2) TMI 1143 - HC - VAT and Sales Tax

Valuation - Whether the land price will get included in the amount of total receipt on the occasion of paying tax as per conciliation scheme in building works contract - Held that - Following decision of State of Karnataka v. Krishvi Projects Pvt. Ltd. 2015 (3) TMI 521 - KARNATAKA HIGH COURT and Larsen and Toubro Limited v. State of Karnataka 2013 (9) TMI 853 - SUPREME COURT - Decided against Revenue.

Summary

Issues:
Sales tax revision petitions arising from the order passed by the Karnataka Appellate Tribunal, Bangalore in STA Nos. 971-1006 of 2011. The substantial questions of law include the nature of transaction/joint development agreement between the landowner and the developer, liability to pay tax on the transfer of goods in works contract, and whether the agreement constitutes a sale under the KVAT Act, 2003.

Analysis:
The High Court addressed the sales tax revision petitions arising from the Karnataka Appellate Tribunal's order in STA Nos. 971-1006 of 2011. The Tribunal had framed a question regarding the inclusion of land price in the total receipt for tax purposes under a conciliation scheme in building works contract. The High Court formulated substantial questions of law related to the nature of the transaction between the landowner and developer, determining the liability for tax on the transfer of goods in works contracts, and whether the agreement could be considered a sale under the KVAT Act, 2003.

The High Court noted that the questions raised were not considered by the Tribunal and agreed with the parties for remand of the matters to the Tribunal for consideration. The Court directed the Tribunal to decide the substantial questions of law expeditiously, within eight months, after hearing both sides and considering all relevant materials, including judgments from higher courts. The parties were allowed to present their contentions, and the Tribunal was given the authority to address connected questions or issues that may arise during the hearing.

Regarding the principal question concerning land value, the High Court referenced a judgment by the Supreme Court in Larsen and Toubro Limited v. State of Karnataka, which had ruled in favor of the respondent-assessee. As a result, the High Court disposed of the sales tax revision petitions in alignment with the order dated February 13, 2014, without imposing any costs. Consequently, the instant sales tax revision petitions were concluded based on the previous order, bringing the legal proceedings to a close.