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2016 (12) TMI 190 - HC - VAT and Sales TaxWorks contract - applicability of provisions of M.P. VAT Act, 2002 on works contract - Held that - The legal question with regard to imposition of liability only with effect from the date the agreement is entered into is a question legal in nature based on the law laid down in the case of Larsen & Toubro Ltd. 2013 (9) TMI 853 - SUPREME COURT and this aspect of the matter has to be considered. That apart, finding the order identical in nature, not to be a speaking order without disclosing any reason, similar order has been quashed by this Court in W.P. No.1767/2014 and in certain other cases. Order impugned Annexure P/4 and all consequential action thereto stands quashed and the matter remanded back to the Assessing Officer for reconsideration keeping in view the observations made herein above. The petitioner shall appear before the Assessing Officer on 15th December, 2016 and on the same being done, the Assessing Officer shall proceed in accordance with law - petition allowed - decided in favor of petitioner.
Issues:
Challenge to order applying M.P. VAT Act, 2002 on works contract without proper reasoning. Analysis: The petitioner challenged the order Annexure P/4 dated 5.2.2014 passed by the Additional Commissioner, Commercial Tax, which held that the provisions of M.P. VAT Act, 2002 would be applicable on the works contract executed by the petitioner. The petitioner's counsel pointed out that the order lacked reasoning for imposing the tax liability on the petitioner. Referring to the case of Larsen & Toubro Ltd. Vs. State of Karnataka, it was argued that liability arises only from the stage the developer enters into a contract with the flat purchaser. The Supreme Court held that the value addition made to the goods transferred after the agreement with the flat purchaser can be chargeable to tax by the State Government. The Court found the order to be non-speaking and passed without considering the legal principle established in the Larsen & Toubro case. Therefore, the Court quashed the order and remanded the matter back to the competent authority for reconsideration. The State raised a preliminary objection based on previous judgments of the Court where similar matters were not entertained under Article 226 of the Constitution and the assessee was directed to file an appeal. However, the petitioner argued that the present case challenges the order applying the VAT Act, 2002 without considering the principles from the Larsen & Toubro case. The Court agreed with the petitioner's argument and emphasized that the legal question regarding the imposition of liability from the date of agreement is crucial and needs to be considered. The Court noted that similar non-speaking orders had been quashed in previous cases. Consequently, the Court allowed the petition, quashed the impugned order, and remanded the matter back to the Assessing Officer for reconsideration. In conclusion, the Court disposed of the petition by quashing the order Annexure P/4 and remanding the matter to the Assessing Officer for reconsideration. The petitioner was directed to appear before the Assessing Officer on a specified date, and the Assessing Officer was instructed to proceed in accordance with the law.
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