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2015 (6) TMI 16 - HC - VAT and Sales TaxConstitutional validity of Explanation (i) to Section 2(1) (zg) of the Haryana Value Added Tax Act, 2003 and Rule 25 (2) of the Haryana Value Added Tax Rules, 2003 - Inclusion of the value of land for charging VAT on developers - Held that - Following decision in the case of CHD Developers Limited, Karnal Vs The State of Haryana and others 2015 (4) TMI 784 - PUNJAB AND HARYANA HIGH COURT , Decided partly in favour of assessee.
Issues:
Challenge to Explanation (i) to Section 2(1)(zg) of the Haryana Value Added Tax Act, 2003 and Rule 25(2) of the Haryana Value Added Tax Rules, 2003 regarding the inclusion of the value of land for charging VAT on developers. Analysis: The writ petition challenged the constitutionality of Explanation (i) to Section 2(1)(zg) of the Haryana Value Added Tax Act, 2003 and Rule 25(2) of the Haryana Value Added Tax Rules, 2003, which included the value of land for VAT on developers. The Division Bench held that any provision seeking to charge tax on an amount beyond the value of goods in a works contract would be unconstitutional. The tax should be based on the value of goods transferred after the agreement for sale with buyers, with deductions specified to ensure taxation only on the value of goods transferred. The value of immovable property and any pre-agreement activities should be excluded. VAT on developers should be on the value of goods at the time of incorporation in the works, not on the transfer of immovable property. Rule 25(2) was upheld with modifications, and the State Government was directed to align the Rules accordingly. The Division Bench disposed of the writ petitions by setting aside assessment and revisional orders based on circulars, allowing fresh assessments based on the clarified legal principles. Orders were to be passed in accordance with the interpretation provided. The competent authority could proceed with issuing orders where notices had been issued, following the legal principles outlined. The writ petitions were partly allowed with these directions. Consequently, the present writ petition, being covered by the earlier judgment, was disposed of in the same terms. No costs were awarded in this matter.
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