2015 (12) TMI 1425 - 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. It shall be open to the petitioner(s) to agitate the question of limitation and any other plea before the assessing authority who shall adjudicate the same also after hearing the petitioner - Petition disposed of.

Summary

Issues:
- Challenge to the 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
- Quashing of assessment order and tax demand notice
- Validity of circulars issued by respondent No.2
- Refund of tax already paid related to the value of materials charged to VAT
- Barred proceedings and statutory notice issuance

Analysis:

1. Challenge to the validity of Explanation and Rule: The petitioner filed a writ petition challenging the 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. The petitioner contended that including the value of land for charging VAT on developers was ultra vires the Constitution of India as it violated Article 246 read with Schedule VII, List II, Entry 54. The prayer sought issuance of a writ in the nature of mandamus and certiorari to declare these provisions unconstitutional.

2. Quashing of assessment order and circulars: The petitioner, a builder engaged in the sale of apartments/flats/units, challenged the assessment order dated 30.3.2015 and tax demand notice issued by respondent No.3. Circulars issued by respondent No.2 were also contested, alleging violation of the Act. The petitioner sought quashing of these orders and circulars, arguing that the imposition of tax on the value of land was beyond the provisions of the Act and Rules.

3. Refund of tax and assessment details: Respondent No.3 raised a substantial tax demand from the petitioner, leading to the challenge in the writ petition. The petitioner highlighted that being engaged in the sale of immovable property with stamp duty paid, the imposition of VAT on developers was deemed unconstitutional and lacked a proper mechanism for tax computation. The plea included a request for a refund of the tax already paid concerning the value of materials charged to VAT.

4. Barred proceedings and statutory notice: The parties agreed that similar issues were addressed in a previous judgment. The petitioner raised concerns about the proceedings being time-barred and challenged the statutory notice issued in Form N-2, claiming it was also beyond the limitation period. The Court directed the petitioner to raise these issues before the assessing authority for adjudication, ensuring a fair hearing and a reasoned decision in accordance with the law.

In conclusion, the judgment disposed of the writ petitions while allowing the petitioner to contest issues of limitation and other pleas before the assessing authority. The decision referenced a previous case for guidance and emphasized the importance of a thorough adjudication process in line with legal principles and procedural fairness.