2021 (11) TMI 440 - HC - VAT and Sales Tax

Imposition of VAT - validity of Ignoring of provisions of Section 8 of Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010 along with Section 2(y) of the Uttar Pradesh Value Added Tax Act, 2008 - entitlement to recover amount in perpetuity once the final demand note has been issued and settled by the appellant to the satisfaction of the respondent - HELD THAT - It is submitted that liability to reimburse the respondent for payment of VAT charges has been imposed upon the appellant only on the ground that the said liability has been admitted by the appellant. However, it is submitted that there was no admission on part of the appellant for reimbursement of VAT charges and the alternative submission raised by the appellant before the Tribunal was taken out of context to record that it was an admission on his part - It is submitted that the Tribunal has also failed to appreciate the fact that once the final demand note dated 13.12.2016 was issued by the respondent without indicating any VAT charges and possession over the property in lieu thereof was handed over to the appellant, there was no question or provision of law under which a supplementary demand notice could have been issued in the year 2019. Submissions advanced by learned counsel for appellant have force and requires consideration for which the respondent is granted four weeks' time to file objections - Till the next date of listing, operation of impugned judgment and order dated 30.07.2021 so far it relates to reimbursement of VAT charges by appellant to respondent shall remain stayed.

Summary

Issues:
1. Condonation of delay in filing appeal during COVID-19 pandemic.
2. Imposition of VAT on category no.3 based on an error of law.
3. Treatment of alternative submission as an admission.
4. Entitlement of respondent to recover amount once final demand note settled.
5. Reimbursement of Value Added Tax (VAT) to Developer/Promoter.
6. Interpretation of Builder-Buyer Agreement clauses.
7. Definition of purchase price under Uttar Pradesh Value Added Tax Act, 2008.
8. Legality of demanding VAT reimbursement post possession transfer.
9. Consideration of admissions in legal proceedings.
10. Issuance of supplementary demand notice for VAT charges.

Analysis:
1. The High Court addressed the delay in filing the appeal due to the COVID-19 pandemic, citing a Supreme Court ruling for reference, holding the appeal to be within limitation.
2. The court admitted the appeal on substantial questions of law, including the imposition of VAT on category no.3, based on the interpretation of relevant statutes.
3. The issue of treating an alternative submission as an admission was raised, questioning the legal implications and consequences.
4. The entitlement of the respondent to recover amounts post-settlement of the final demand note was discussed, emphasizing legal provisions and obligations.
5. The appeal focused on the reimbursement of VAT to the Developer/Promoter, analyzing the terms of the Builder-Buyer Agreement and related legal definitions.
6. Detailed examination of the Builder-Buyer Agreement clauses was conducted to determine the extent of liability and compliance requirements.
7. The interpretation of the purchase price under the Uttar Pradesh Value Added Tax Act, 2008, was crucial in assessing the VAT reimbursement issue.
8. Legality of demanding VAT reimbursement after possession transfer was debated, considering the timing and legal obligations.
9. The court analyzed the admissions made during legal proceedings and their implications on liability and obligations.
10. The issuance of a supplementary demand notice for VAT charges post a previous settlement was scrutinized for legal validity and procedural adherence.