2015 (12) TMI 1136 - HC - VAT and Sales Tax

Inclusion of value of land for charging Value Added Tax - development and sale of apartments/flats/units - Held that - Issues raised in the present petition have been adjudicated by this Court in 2015 (4) TMI 784 - PUNJAB AND HARYANA HIGH COURT (CHD Developers Limited, Karnal v. The State of Haryana and others). It was urged by the learned counsel for the petitioner that additionally the proceedings initiated were barred by limitation and even the statutory notice in Form N-2 issued, considering the petitioner as lump sum dealer, is also barred by limitation. - Petition disposed of.

Summary

Issues involved:
Challenge to assessment order for Value Added Tax (VAT) treatment, validity of circulars issued by respondent, constitutionality of certain provisions of Haryana Value Added Tax Act, 2003, imposition of VAT on builders/developers, computation of tax, limitation of proceedings, validity of statutory notice in Form N-2.

Analysis:

1. The petitioner filed a writ petition under Articles 226/227 of the Constitution of India seeking to quash the assessment order dated 30.3.2015 and circulars issued by the respondent related to the assessment of VAT on builders/developers. The petitioner argued that certain provisions of the Haryana Value Added Tax Act, 2003, including the inclusion of the value of land for charging VAT, were ultra vires the Constitution of India. The petitioner also challenged the imposition of tax where stamp duty was already paid and raised issues of limitation regarding the proceedings initiated and the statutory notice in Form N-2.

2. The petitioner, a developer engaged in the sale of apartments/flats/units, was registered with the Department of Sales Tax. Circulars were issued by the respondent regarding the applicability of VAT to developers entering into agreements for sale of constructed properties. Subsequent circulars varied the treatment, including the value of land for VAT imposition. Despite a notification defining 'developer' other than a contractor, the petitioner was assessed as a lump sum dealer, leading to the present dispute. The petitioner contended that the imposition of tax without a mechanism for computation and where stamp duty was already paid was beyond the provisions of the Act and Rules.

3. The High Court considered the arguments presented by both parties and noted that similar issues had been adjudicated in a previous case. Referring to CWP No. 5730 of 2014, the Court directed that the petitioner could raise the question of limitation before the assessing authority, who would need to adjudicate on the matter after hearing the petitioner or its representative and passing a speaking order in accordance with the law. The Court disposed of the writ petition in line with the previous judgment.

In conclusion, the judgment addressed multiple issues concerning the assessment of VAT on builders/developers, the validity of circulars, the constitutionality of tax provisions, and the applicability of limitation to the proceedings. The Court provided a pathway for the petitioner to challenge the limitation aspect before the assessing authority, ensuring a fair opportunity for further legal recourse.