2015 (7) TMI 629 - HC - VAT and Sales Tax

Levy of vat on construction of residential apartments - valuation - Alternative remedy - claime of deduction on the value of the undivided interest (immovable property) in the project - Held that - petitioner has already paid a sum of ₹ 5.00 crores pursuant to an interim order passed by this Court - while the writ petitions are dismissed as not maintainable on account of availability of alternative remedy, liberty is reserved to the petitioner to avail the alternative remedy, if so advised. However, respondents are directed not to make any fresh demand pending disposal of the appeal/appeals, if any, to be filed by the petitioner. The First Appellate Authority to consider the issues raised on the aspect of the applicability of the Circular dated 7.12.2009, with an open mind and having regard to the facts of the present case decide the appeal/appeals within a period of two months from the date of filing of the appeal/appeals.

Issues:
1. Challenge to re-assessment orders and demand notices for assessment years 2010-11 and 2011-12.
2. Assailing Circular No.12/2009-10 dated 7.12.2009.
3. Claim for deduction on the value of undivided interest in the project under the Karnataka Value Added Tax Act, 2003.

Analysis:
1. The petitioner, a real estate development company, challenged re-assessment orders and demand notices for the assessment years 2010-11 and 2011-12. The petitioner entered into a Joint Development Agreement with other parties to construct residential apartments on land owned by them. The petitioner sold the apartments and claimed deduction on the value of the undivided interest in the project. However, the assessing authority did not accept the deduction claim, leading to the dispute. The petitioner contended that Circular No.12/2009-10 was erroneously applied to their case, as the undivided interest in the project had been sold along with the apartments to purchasers. The High Court noted the need for a factual finding on the applicability of the Circular and directed the petitioner to seek adjudication through the First Appellate Authority.

2. The High Court considered the applicability of Circular No.12/2009-10 dated 7.12.2009, which was central to the dispute. The petitioner argued that the Circular was not applicable to their case due to the nature of the transaction entered into with the landowners and apartment purchasers. The assessing authority and the petitioner had conflicting views on the applicability of the Circular. The Court emphasized the importance of determining the nature of the transaction before deciding on the Circular's applicability. It directed the petitioner to approach the First Appellate Authority for a detailed examination of the issues and the Circular's relevance based on the factual aspects of the case.

3. The High Court dismissed the writ petitions as not maintainable due to the availability of an alternative remedy under Section 62 of the Act. However, it reserved liberty for the petitioner to avail the alternative remedy. The Court instructed the respondents not to make any fresh demand pending the disposal of the appeal to be filed by the petitioner. It set a deadline for filing the appeal and directed the First Appellate Authority to consider the applicability of the Circular dated 7.12.2009 with an open mind and decide on the appeal within a specified timeframe. The Court disposed of the writ petitions with these directions, leaving all contentions open for both parties.

This detailed analysis highlights the key issues raised in the legal judgment, focusing on the challenge to re-assessment orders, the dispute over the applicability of Circular No.12/2009-10, and the claim for deduction under the Karnataka Value Added Tax Act, 2003.

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