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TMI Blog2013 (11) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... of of 2007; 882 of 2007; 883 of 2007; 1153 of 2007; 1824 of 2008; 1825 of 2008; 1826 of 2008; 60 of 2012; 259 of 2012; 294 of 2012; 852 of 2012; 955 of 2012; 1085 of 2012; 1136 of 2011; 1281 of - - - Dated:- 4-10-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Petitioner : Praveen Kumar, Ashok Kumar For the Respondent : C. S. C. ORDER 1. We have heard Shri R.R. Agarwal, Senior Counsel assisted by S/Shri Suyash Agarwal; Ashok Kumar, Praveen Kumar; Subham Agarwal; Piyush Agrawal; N.C. Gupta; Vinod Swarup; Swapnil Kumar and Rahul Agarwal for the petitioners. Shri C.B. Tripathi, Special Standing Counsel appears for the State respondents. 2. In all the writ petitions filed by petitioners carrying on business as promoters, builders, developers, real estate agents or as owners of land raising constructions of flats/ apartments, the notices and assessment orders issued/ passed by the commercial tax authorities under the U.P. Value Added Tax Act, 2008, for levying commercial tax on the sale of goods under the works contracts/ agreements in constructions as defined in Clause (m) of Section 2 read with Section 3F of the Act has been challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specie of contract to provide for labour and services alone. Nothing in Article 366(29-A)(b) limits the term works contract . (iv) Building contracts are species of the works contract. (v) A contract may involve both a contract of work and labour and a contract for sale. In such composite contract, the distinction between contract for sale of goods and contract for work (or service) is virtually diminished. (vi) The dominant nature test has no application and the traditional decisions which have held that the substance of the contract must be seen have lost their significance where transactions are of the nature contemplated in Article 366(29-A). Even if the dominant intention of the contract is not to transfer the property in goods and rather it is rendering of service or the ultimate transaction is transfer of immovable property, then also it is open to the States to levy sales tax on the materials used in such contract if such contract otherwise has elements of works contract. The enforceability test is also not determinative. (vii) A transfer of property in goods under clause 29-A(b) of Article 366 is deemed to be a sale of the goods involved in the execution of a work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed payment or other valuable consideration. (iii) The definition of works contract does not make a distinction based on who carries on the construction activity. Even an owner of the property may be said to be carrying on a works contract if he enters into an agreement to construct for cash, deferred payment or other valuable consideration. (iv) The developers had undertaken to build for the prospective purchaser. (v) Such construction/development was to be on payment of a price in various installments set out in the agreement. (vi) The developers were not the owners. They claimed lien on the property. They had right to terminate the agreement and dispose of the unit if a breach was committed by the purchaser. A clause like this does not mean that the agreement ceases to be works contract . So long as there is no termination, the construction is for and on behalf of the purchaser and it remains a works contract . (vii) If there is a termination and a particular unit is not resold but retained by the developer, there would be no works contract to that extent. (viii) If the agreement is entered into after the flat or unit is already constructed then there would be no wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007, relying upon K. Raheja Development Corporation vs. State of Karnataka (supra) this Court had entertained and allowed the writ petition against the assessment orders imposing tax on construction of flats/apartments/houses and other constructions in question on the ground that the petitioner in that case was constructing the flats/apartments not for and on behalf of prospective allottees or otherwise. The payment schedule would not alter the transaction. The right, title and interest in the construction would continue to remain with the petitioner. The Court held in the facts of that case that it cannot be said that the constructions were undertaken for or on behalf of the prospective allottees and therefore, the constructions in question undertaken by the petitioner would not fall under clause (m) of Section 2 read with Section 3F of the Act, and are outside the purview of the provisions of the Act and they cannot be subjected to tax under the Act and that the action in imposing tax on such constructions treating them to be works contract was wholly without jurisdiction. The Court set aside the assessment order passed by the Assistant Commissioner, Trade Tax, Sector-I, Noida in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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