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TMI Blog2025 (4) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,000/- towards balance GST fee and produce the challan for proof of payment, copy of the same is produced as ANNEXURE-N. b) issue a writ order or direction in the nature of mandamus to the respondent to give effect to the representation of the petitioner to the respondent, copy of the representation of the Petitioner to the Respondent dated 05.09.2019 is produced as ANNEXURE-P. (b1) Issue a writ order or direction in the nature of mandamus to the Respondent No.1 to refund the Car Park sale proceeds illegally received from the Petitioner being an amount of Rs. 2.00 Lakhs in view of the law laid down by the Hon'ble Apex Court. (b2) Issue a Writ Order or direction to the Respondent- BDA in the nature of Mandamus to execute the Lease Cum Sale deed and put the Petitioner in physical possession of the Flat allotted in his favor by providing all modern amenities within 15 days at the same price sold to identical purchasers as per the sale deed produced as ANNEXURE-Q from today to serve the ends of justice. (b3) To impose exemplary costs on the Respondent BDA for all illegal actions contained in the petition being statutory lapses and volition of rule of law. (c) pass such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of an Allotment Certificate dated 09.04.2018 and the petitioner had paid the entire sale consideration in a total sum of Rs. 44,91,250/-. as indicated by the respondent- BDA as per the payment schedule. In addition petitioner had also paid Rs. 2,00,000/- towards the car parking space as per the advertisement. That petitioner had requested the respondent-BDA to inform the date of registration of the apartment allotted in his favour. (b) When things stood thus, respondent- BDA had issued an endorsement to the petitioner on 23.08.2019 calling upon the petitioner to pay a sum of Rs. 5,28,000/- towards the service Tax (GST) under the provisions of the Central Goods and Services Tax Act, 2017 (for short Act 2017) fee and to produce challan as a proof for having made the said payment. Petitioner in response had made a representation as per Annexure-P informing the respondent-BDA that, what was offered to him was a full completed apartment and there was no pre-construction agreement between the petitioner and respondent-BDA. As such, there was no question of payment of any service tax. It is contended when there was no supply or exchange of any service between the petitioner and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the nationalised bank or any other financial institutions. That petitioners had initially paid the sale consideration as quoted in the letters of allotment. That inspite of the payments of the sale consideration, the respondent- BDA failed to register the houses by executing absolute deeds of sale, instead issued endorsement calling upon the petitioners to pay the GST contending the construction of their duplex row houses was completed on and after 30.06.2017. (c) Some of the petitioners had submitted representations requesting the respondent -BDA not to insist for payment of GST, inasmuch as, in the initial notification issued by the respondent-BDA all taxes had been included. As such, respondent-BDA was not justified in collecting the additional tax towards the GST, is their claim. (d) It is also contended the rate at which the GST is demanded is not uniform. Different amounts have been demanded for different duplex row houses. It is contended that the respondent- BDA in its note sheet had noted no GST was liable to be paid in respect of the row houses that were completed before 30.06.2017. However, in respect to the houses purchased by the petitioners, the respondent-BDA h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and also the documents enclosed with the writ petition, vehemently submitted that; (a) the petitioner had been provisionally allotted apartment bearing Flat No.B1-501 of Valagerahalli Phase 6. That by the very notification/advertisement which was published by the respondent- BDA, General Public was called upon representing "pick a flat of your choice by submitting applications across the counter", as such it has to be presumed that the apartment offered by the respondent-BDA to the petitioner was completed in all respects. (b) He also referred to Clause 5 of the said notification to submit that the same had indicated successful applicants would have the options of choosing apartment of their choice. (c) He also referred to the Allotment Letter dated 09.04.2018 to contend that even on the date when the letter of allotment was issued the apartment was fully completed. As such, the total value of the apartment was indicated in the said letter as Rs. 44,00,000/-. (d) Referring to the aforesaid documents, learned counsel submitted that since what was given to the petitioner was a complete apartment, and there was no construction agreement, as such the respondent- BDA was not j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand made by the respondent- BDA was one against the law laid down by the Apex Court. (k) He submitted that the law laid down by the Apex Court in the aforesaid judgments holds the field and the same is applicable to the facts of the instant case as well. Hence, seeks for allowing of the writ petition. 6. Sri Raghavendra G. Gayatri, learned counsel appearing for the petitioners in W.P.No.7028/2022 supplementing the submission made by Sri K.B. Monesh Kumar taking this Court through the records submitted that; (a) the very tender document in terms of which the respondent-BDA had allotted the construction contract to the tenderer/contractor provided that all taxes and duties including the taxes, duties and levies towards sales tax, service tax, municipal taxes, local taxes, octroi, work welfare cess etc., are required to be paid by the tenderer/contractor. (b) He referred to Clause 17 of the said tender document to point out that it was the responsibility of the tenderer/contractor to have completed the construction within the time stipulated thereunder. He submitted even if there was any delay in completing the construction by the tenderer/contractor, the liability of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Office Notes referred to in the said proceedings was in respect of a different project and not the project concerning the petitioners. He submitted that the project in which the petitioners have purchased the row houses pertain to Block Nos. 9, 13,18 and 22 constructed in the land bearing Sy.No.114 and 115 of Alur Village, Phase-2, construction of which was completed on 31.01.2019, while the project in respect of which the payment of tax was exempted was in respect of project in Blocks 1 to 5 construction of which was completed 30.06.2017. Hence, he submitted that there was no discrimination. 9. Learned Senior counsel appearing for the respondent -BDA as well as Sri. K.Krishna, learned counsel for the respondent -BDA also referred to Section 7 of the Act, 2017 and item 5 of Schedule II thereunder which according to them would provide that if an agreement is entered into prior to completion of construction the liability to pay the GST would be on the purchasers. Thus, they submitted the law laid by the Apex Court in the case of Larsen and Toubro Limited (supra) is applicable with full force to the facts and circumstance of the case at hand. Hence, seek for dismissal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier. Explanation. For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (f) transfer of the right to use any goods for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racts also include building contracts and therefore without any fear of contradiction it can be stated that building contracts are species of the works contract. 90. Ordinarily in the case of a works contract the property in the goods used in the construction of the building passes to the owner of the land on which the building is constructed when the goods and materials used are incorporated in the building. But there may be contract to the contrary or a statute may provide otherwise. Therefore, it cannot be said to be an absolute proposition in law that the ownership of the goods must pass by way of accretion or exertion to the owner of the immovable property to which they are affixed or upon which the building is built. 91. Value addition as a concept after the Forty- sixth Amendment to the Constitution has been accepted by this Court in P.N.C. Construction [State of U.P. v. P.N.C. Construction Co. Ltd., (2007) 7 SCC 320] . While dealing with this concept, the Court said that value addition was an important concept which had arisen after the Forty- sixth Amendment by insertion of sub-clause (b) of clause (29-A) in Article 366. It has now become possible for the States to lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deprive them of the character of goods." 97. In light of the above discussion, we may summarise the legal position, as follows: 97.1. For sustaining the levy of tax on the goods deemed to have been sold in execution of a works contract, three conditions must be fulfilled: (i) there must be a works contract, (ii) the goods should have been involved in the execution of a works contract, and (iii) the property in those goods must be transferred to a third party either as goods or in some other form. 97.2. For the purposes of Article 366(29-A)(b), in a building contract or any contract to do construction, if the developer has received or is entitled to receive valuable consideration, the above three things are fully met. It is so because in the performance of a contract for construction of building, the goods (chattels) like cement, concrete, steel, bricks, etc. are intended to be incorporated in the structure and even though they lost their identity as goods but this factor does not prevent them from being goods. 97.3. Where a contract comprises of both a works contract does not denude it of its character as works contract. The term "works contract" in Article 366(29-A)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of works contract. 97.10. Article 366(29-A)(b) serves to bring transactions where essential ingredients of "sale" defined in the Sale of Goods Act, 1930 are absent within the ambit of sale or purchase for the purposes of levy of sales tax. In other words, transfer of movable property in a works contract is deemed to be sale even though it may not be sale within the meaning of the Sale of Goods Act. 97.11. Taxing the sale of goods element in a works contract under Article 366(29-A)(b) read with Entry 54 List II is permissible even after incorporation of goods provided tax is directed to the value of goods and does not purport to tax the transfer of immovable property. The value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of the goods in works even though property passes as between the developer and the flat purchaser after incorporation of goods. 101. Section 5-B of the KST Act provides for levy of tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract. 102. On consideration of the arguments that were put forth by the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion?. 16. Relevant to refer the very notification dated 09.08.2017 issued by the respondent -BDA produced at Annexure-A. Under the heading "Note" below the table of payment, following is mentioned; "Note: 1. Final price of the flat may vary depending upon the revision, if any, 2. BWSSB and BESCOM deposits are not included in the price of the flat. These deposits are to be paid separately as per the zone where the flats are being constructed. 3. applicable GST to be paid separately by the allottees. 4. available covered parking space will be separately allotted to the allottees on first come first serve basis at additional price Rs. 2 lakhs per covered car parking flat." Thus when the advertisement/notification was issued the construction was still in progress. 17. The acknowledgement slip at Annexure-A relied upon by the petitioner in WP No.51001/2019 reads as under; "It is also informed that you have been provisionally allotted flat No.B1-501 of Valagerahalli phase 6. The project allotment letter will follow the date of the said acknowledgement is 09.08.2017." Thus that allotment was only provisional. 18. Further the payment schedule as found at Annexure-K, a lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,750.00 09.08.2018 9,18,750.00 04.10.2018 9,18,750.00 22. Perusal of which would indicate that the petitioners therein had made applications for allotment of houses pursuant to the notification that was issued during the years 2017 and 2018. That payments were made partly and there were certain balance amounts which warranted respondent-BDA to issue notices calling upon the petitioners therein to pay the balance amount along with the applicable GST. This had apparently constraints some of the petitioners to approach the Consumer Dispute Redressal Forum. It appears some of the petitioners had even voluntarily agreed to pay the GST amount without prejudice to seek refund subject to outcome of the present writ petition. 23. In the statement of objection of the respondent- BDA, it is contended that the project was completed only on 31.01.2019 and a certificate in this regard had been issued. The project in respect of which the petitioners had purchased the houses were in Block Nos.9, 13, 18 and 22 constructed in the land bearing Sy.Nos.114 and 115 of Alur village, Phase-II of Dasanapura Hobli, Bangalore North Taluk. Since the petitioners who had applied for allotment of flats bet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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