Karnataka High Court
The Joint Commissioner Of Commercial ... vs Bren Corporation on 17 April, 2026
Author: S.G.Pandit
Bench: S.G.Pandit
-1-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF APRIL, 2026
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
SALES TAX REVISION PETITION No.181 OF 2018
C/W
REVIEW PETITION No.403 OF 2025
REVIEW PETITION No.404 OF 2025
REVIEW PETITION No.405 OF 2025
SALES TAX APPEAL No.133 OF 2012
SALES TAX APPEAL No.8 OF 2022
SALES TAX APPEAL No.9 OF 2022
SALES TAX APPEAL No.10 OF 2022
SALES TAX APPEAL No.13 OF 2022
SALES TAX APPEAL No.14 OF 2022
SALES TAX APPEAL No.15 OF 2022
Digitally signed by
NANJUNDACHARI SALES TAX APPEAL No.16 OF 2022
Location: HIGH SALES TAX APPEAL No.17 OF 2022
COURT OF
KARNATAKA SALES TAX REVISION PETITION No.182 OF 2018
SALES TAX REVISION PETITION No.25 OF 2019
SALES TAX REVISION PETITION No.49 OF 2019
SALES TAX REVISION PETITION No.71 OF 2019
SALES TAX REVISION PETITION No.72 OF 2019
SALES TAX REVISION PETITION No.73 OF 2019
SALES TAX REVISION PETITION No.74 OF 2019
SALES TAX REVISION PETITION No.75 OF 2019
-2-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
SALES TAX REVISION PETITION No.76 OF 2019
SALES TAX REVISION PETITION No.77 OF 2019
SALES TAX REVISION PETITION No.1 OF 2020
SALES TAX REVISION PETITION No.4 OF 2020
SALES TAX REVISION PETITION No.5 OF 2020
SALES TAX REVISION PETITION No.6 OF 2020
SALES TAX REVISION PETITION No.18 OF 2020
SALES TAX REVISION PETITION No.2 OF 2022
IN STRP No. 181/2018
BETWEEN:
1. THE STATE OF KARNATAKA,
REPRESENTED BY THE SECRETARY,
FINANCE DEPARTMENT,
VIDHANA SOUDHA,
BENGALURU 560001.
...PETITIONER
(BY SRI ADITYA VIKRAM BHAT, AGA)
AND:
1. M/S VASWANI ESTATES DEVELOPERS
PRIVATE LIMITED,
VASWANI VICTORIA,
No.30, VICTORIA ROAD,
BENGALURU 560047.
...RESPONDENT
(BY SRI T. SURYA NARAYANA, SENIOR ADVOCATE FOR
SMT. TANMAYEE RAJKUMAR, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT., 2003 AGAINST THE
JUDGMENT DATED 28.04.2017 PASSED IN STA.Nos.971 TO
1006/2011 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, PARTLY ALLOWING THE APPEALS
AND UPHOLDING THE RECTIFICATION ORDER DATED
-3-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
19.10.2010 PASSED BY ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES [ENFORCEMENT]-14, SOUTH ZONE,
BENGALURU UNDER SECTION 69[1] R/W SECTION 39[1] OF THE
ACT FOR 12 TAX PERIODS FROM APRIL 2006 TO MARCH-2007,
12 TAX PERIODS FROM ARPIL 2007 TO MARCH-2008 AND 12
TAX PERIIODS FROM APRIL 2008 TO MARCH-2009.
IN RP No. 403/2025
BETWEEN:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-1,
DEPARTMENT OF COMMERCIAL TAXES,
GOVERNMENT OF KARNATAKA,
GANDHINAGAR,
BANGALORE 560001.
2. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES (AUDIT)-1.1
DGSTO-1, YESHWANTHPURA,
BENGALURU-560022.
3. THE UNDER SECRETARY
FINANCE DEPARTMENT (C.T-1),
KARNATAKA GOVERNMENT SECRETARIAT,
VIDHANA SOUDHA,
BENGALURU-560001.
...PETITIONERS
(BY SRI ADITYA VIKRAM BHAT, AGA)
AND:
1. FORTIOUS INFRA DEVELOPER LLP.,
LEVEL FOUR, RAHEJA PARAMOUNT,
138/9, RESIDENCY ROAD, RICHMOND CIRCLE,
BENGALURU-560025.
(REPRESENTED BY
SRI GOPIKRISHNAN K. Y.,
PARTNER OF
M/S FORTIOUS INFRA DEVELOPERS LLP).
...RESPONDENT
-4-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
(BY SRI RAGHAVENDRA C. R., ADVOCATE)
THIS REVIEW PETITION IS FILED UNDER SECTION 114
R/W ORDER 47 RULE 1 OF CPC 1908, PRAYING TO REVIEW
THE ORDER DATED 02.04.2025 PASSED IN STA No.18/2022
(T-RES).
IN RP No. 404/2025
BETWEEN:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-1,
DEPARTMENT OF COMMERCIAL TAXES,
GOVERNMENT OF KARNATAKA,
GANDHINAGAR,
BANGALORE 560001.
2. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES (AUDIT)-1.1,
DGSTO-1, YESHWANTHPURA,
BENGALURU 560022.
3. THE UNDER SECRETARY,
FINANCE DEPARTMENT (C.T-1),
KARNATAKA GOVERNMENT SECRETARIAT,
VIDHANA SOUDHA,
BENGALURU 560001.
...PETITIONERS
(BY SRI ADITYA VIKRAM BHAT, AGA)
AND:
1. M/S. FORTIOUS INFRADEVELOPERS LLP,
LEVEL FOUR, RAHEJA PARAMOUNT,
138/9, RESIDENCY ROAD,
RICHMOND CIRCLE,
BENGALURU 560025.
(REPRESENTED BY
SRI GOPIKRISHNAN K.Y.,
-5-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
PARTNER OF
M/S. FORTIOUS INFRADEVELOPERS LLP).
...RESPONDENT
(BY SRI RAGHAVENDRA C. R., ADVOCATE)
THIS REVIEW PETITION IS FILED UNDER ORDER 47 RULE
1 R/W SECTION 114 of CPC, PRAYING TO REVIEW THE ORDER
DATED 02.04.2025 PASSED IN STA No.20/2022 IN THE
INTEREST OF JUSTICE AND EQUITY.
IN RP No. 405/2025
BETWEEN:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-1,
DEPARTMENT OF COMMERCIAL TAXES,
GOVERNMENT OF KARNATAKA,
GANDHINAGAR,
BANGALORE 560001.
2. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES (AUDIT)-1.1,
DGSTO-1, YESHWANTHPURA,
BENGALURU 560022.
3. THE UNDER SECRETARY
FINANCE DEPARTMENT (C.T-1),
KARNATAKA GOVERNMENT SECRETARIAT,
VIDHANA SOUDHA,
BENGALURU 560001.
...PETITIONERS
(BY SRI ADITYA VIKRAM BHAT, AGA)
AND:
1. M/S. FORTIOUS INFRADEVELOPERS LLP,
LEVEL FOUR, RAHEJA PARAMOUNT,
138/9, RESIDENCY ROAD,
RICHMOND CIRCLE,
BENGALURU 560025.
-6-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
(REPRESENTED BY
SRI GOPIKRISHNAN K.Y.,
PARTNER OF
M/S. FORTIOUS INFRADEVELOPERS LLP).
...RESPONDENT
(BY SRI RAGHAVENDRA C. R., ADVOCATE)
THIS REVIEW PETITION IS FILED UNDER SECTION 114
R/W ORDER 47 RULE 1 OF CPC, PRAYING TO REVIEW THE
ORDER DATED 2.04.2025 PASSED IN STA No.19/2022 IN THE
INTEREST OF JUSTICE AND EQUITY.
IN STA No.133/2012
BETWEEN:
1. MOHAN LAL JINDAL,
SINCE DEAD BY HIS LRS,
1(a) MR. SUSHIL KUMAR JINDAL,
S/O. LATE MOHANLAL JINDAL,
AGED ABOUT 57 YEARS,
R/AT No.17, LAXMI ROAD,
SHANTINAGAR,
BANGALORE - 560017.
1(b) MRS. AMRITA AGARWAL,
D/O. LATE MOHANLAL JINDAL,
AGED ABOUT 66 YEARS,
R/AT H. No.1191, JUBILEE HILLS,
ROAD No.59, SHAIKPET,
HYDERABAD - 500033.
1(c) MRS. DIMPLE BAJAJ,
D/O. LATE MOHANLAL JINDAL,
AGED ABOUT 50 YEARS,
R/AT FLAT No.S3/S4, 2ND FLOOR,
A BLOCK, LANDMARKS TOWN HALL,
APTS, 69/71, MC NICHOLS ROAD,
CHETPET, CHENNAI - 600031.
-7-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
2. AVINASH PRABHU,
S/O. PETER PRABHU,
AGED ABOUT 49 YEARS,
RESIDING AT No.880,
CMC MAHADEVAPURA,
BENNINGANAHALLI POPST,
NEST TO RAILWAY FLYOVER,
K.R. PURAM, BENGALURU 560 049.
...APPELLANTS
(BY SRI. G. SRIDHAR, ADVOCATE)
AND:
1. ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES
ZONE III, VTK I, GANDHINAGAR,
BANGALORE 560 009.
2. DEPUTY COMMISSIONER OF
COMMERCIAL TAXES
VTK 2, 5TH FLOOR, KORAMANGALA,
BANGALORE 560047.
...RESPONDENTS
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 64(1) OF
KARNATAKA VALUE ADDED TAX ACT, AGAINST THE ORDER
DATED 17.8.2012 PASSED IN ZAC-III/SMR/KVAT/CR-11/12 ON
THE FILE OF ADDITIONAL COMMISSIONER OF COMMERCIAL
TAXES (ZONE)-3, VTK-1, BANGALORE, SETTING ASIDE THE
ORDER PASSED BY AA AND FAA, REMITTING THE MATTER TO
A.A. FOR CONCLUDING FRESH REASSESSMENTS IN LIGHT OF
THE DISCUSSION MADE IN THE COURSE OF THE ORDER FOR
THE TAX PERIODS APRIL 2006 TO MARCH 2007.
IN STA No.8/2022
BETWEEN:
1. M/S H. M. INFRATECH PVT. LTD.,
No.14, H. M. GENEVA HOUSE,
-8-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
CUNNINGHAM ROAD,
BENGALURU - 560 052,
(REPRESENTED BY ITS DIRECTOR
SRI MAHEBOOBJUSAB SIWANI)
...APPELLANT
(BY SRI ATUL KRISHNA RAO ALUR, ADVOCATE)
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES (ZONE) - 1,
7TH FLOOR, VTK-2, KALIDASA ROAD,
GANDHINAGAR, BANGALORE - 09.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 25.02.2022 PASSED
IN No.ZAC-1/BNG/KVAT/SMR-25/2020-21 ON THE FILE OF THE
ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES ZONE-I,
GANDHINAGAR BANGALORE, FILED AGAINST THE RE
ASSESSMENT ORDER WAS PASSED UNDER SECTION 39(1)
AND 36 AND 72(2) OF THE KVAT ACT 2003, DATED
14.01.2016 BY THE ASSISTANT COMMISSIONER COMMERCIAL
TAXES (AUDIT) 1.6, DVO-1, BENGALURU FOR THE TAX
PERIODS YEAR 2009-10.
IN STA No.9/2022
BETWEEN:
1. M/S H. M. INFRATECH PVT. LTD,
No.14, H. M. GENEVA HOUSE,
CUNNINGHAM ROAD,
BENGALURU - 560 052,
(REPRESENTED BY ITS DIRECTOR
SRI MAHEBOOB JUSAB SIWANI)
...APPELLANT
(BY SRI ATUL KRISHNA RAO ALUR, ADVOCATE)
-9-
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
AND:
1. THE ADDITIONAL COMMISSIONER
OF COMMERCIAL TAXES, ZONE - 1
7TH FLOOR, VANIJYA THERIGE KARYALAYA
KALIDASA ROAD, GANDHINAGAR
BANGALORE - 09.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 25.02.2022 PASSED
IN No.ZAC-1/BNG/SMR-26/2020-21 ON THE FILE OF THE
ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES ZONE-I,
GANDHINAGAR BENGALURU SETTING ASIDE THE RE
ASSESSMENT ORDER DATED 26.04.2017 PASSED IN
No.JCCT/DV0-1/CTO(A)-1.4/CR-1661/16-17 ON THE FILE OF
THE JOINT COMMISSIONER OF COMMERCIAL TAX OFFICER
(AUDIT) 1.4, DV0-1, BENGALURU FILED UNDER SECTION
39(1) OF THE KVAT ACT 2003 AND FILED AGAINST THE
ORDER DATED 31.12.2020 PASSED IN ZAC-1/BNG/SMT-26/20-
21 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE 1, GANDHINAGAR, BANGALORE
FILED UNDER SECTION 64(1) OF THE KVAT ACT 2003 FOR THE
TAX PERIODS OF 2010-11.
IN STA No.10/2022
BETWEEN:
1. M/S H. M. INFRATECH PVT. LTD.,
No.14, H. M. GENEVA HOUSE,
CUNNINGHAM ROAD,
BENGALURU-560052,
(REPRESENTED BY ITS DIRECTOR
SRI MAHEBOOB JUSAB SIWANI)
...APPELLANT
(BY SRI ATUL KRISHNA RAO ALUR, ADVOCATE)
- 10 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
AND:
1. THE ADDITIONAL COMMISSIONER
OF COMMERCIAL TAXES, (ZONE)-1,
7TH FLOOR VTK-2, KALIDASA ROAD,
GANDHINAGAR, BANGALORE-9.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF
KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE
ORDER DATED 25.02.2022 PASSED IN ORDER No.ZAC-
1/BNG/SMR-27/2020-21 ON THE FILE OF THE ADDITIONAL
COMMISSIONER OF COMMERCIAL TAXES, ZONE-1,
GANDHINAGAR, BENGALURU, SETTING ASIDE THE ORDER OF
RECTIFICATION DATED 14.07.2017 PASSED IN CAS
No.239409539.03 RECTIFYING THE ORDER DATED
28.08.2016, PASSED BY THE COMMERCIAL TAX OFFICER
(AUDIT) -1.3, DVO-1, BANGALORE. IN PURSUANCE OF THE
ORDER DATED 18.03.2017, PASSED BY THE JCCT APPEAL,
SHANTHI NAGAR, BANGALORE IN VAT AP.No.32/15-16 PARTLY
ALLOWED THE APPEAL BY MODIFYING THE RE-ASSESSMENT
ORDERS AND PENALTY ORDERS DATED 19.02.2015, PASSED
UNDER SECTION 39(1) AND 72(2) OF THE KVAT ACT, 2003
RESPECTIVELY BY THE COMMERCIAL TAX OFFICER (AUDIT-
1.3), DVO-1, BANGALORE FOR THE TAX PERIODS FROM APRIL
2011 TO MARCH 2012.
IN STA No.13/2022
BETWEEN:
1. M/S STERLING DEVELOPERS PRIVATE LIMITED,
No.8, LEVEL 5, PRESTIGE NEBULA,
CUBBON ROAD, BENGALURU 560 001,
RERPESENTED BY
VENKAT RAMANI SASTRI,
DIRECTOR.
...APPELLANT
(BY SRI SURYA KANTH C. S., ADVOCATE)
- 11 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-I,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR,
BENGALURU 560 009.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF
KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE
ORDER DATED 25.08.2022 PASSED IN ORDER No.ZAC-
1/BNG/SMR-32/2021-22, ON THE FILE OF THE ADDITIONAL
COMMISSIONER OF COMMERCIAL TAXES, ZONE-1,
BENGALURU. SETTING ASIDE AND FILED AGAINST THE RE-
ASSESSMENT ORDER DATED 15.02.2021 PASSED IN CAS
ORDER No.323381057 BY THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT-1.7) DGSTO-1 YESHWANTHPUR,
BANGALORE, UNDER SECTION 39(1) OF THE KVAT ACT, 2003
FOR THE TAX PERIOD FOR APRIL 2017 TO JUNE 2017.
IN STA No.14/2022
BETWEEN:
1. M/S STERLING DEVELOPERS PRIVATE LIMITED,
No.8, LEVEL 5, PRESTIGE NEBULA,
CUBBON ROAD, BENGALURU 560 001,
RERPESENTED BY
VENKAT RAMANI SASTRI,
DIRECTOR.
...APPELLANT
(BY SRI SURYA KANTH C. S., ADVOCATE)
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-I,
VANIJYA THERIGE KARYALAYA,
- 12 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
GANDHINAGAR,
BENGALURU 560 009.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF KARNATAKA
VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED
25.08.2022 PASSED IN ORDER No.ZAC-1/BNG/SMR-30/2021-
22 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-1, GANDHINAGAR, BENGALURU,
SETTING ASIDE THE APPEAL AND FILED AGAINST THE
REASSESSMENT ODER DATED 15.10.2019 PASSED IN CAS
No.324220758 PASSED BY THE ADDITIONAL COMMISSINOER
OF COMMERCIAL TAX (AUDIT)-1.1, BENGALURU UNDER
SECTION 39(1) OF THE KVAT ACT 2003 FOR THE TAX PERIODS
OF APRIL 2015 TO MARCH 2016.
IN STA No.15/2022
BETWEEN:
1. M/S STERLING DEVELOPERS PRIVATE LIMITED,
No.8, LEVEL 5, PRESTIGE NEBULA,
CUBBON ROAD, BENGALURU 560 001.
RERPESENTED BY
VENKAT RAMANI SASTRI,
DIRECTOR.
...APPELLANT
(BY SRI SURYA KANTH C. S., ADVOCATE)
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-I,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR,
BENGALURU 560 009.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
- 13 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
THIS STA IS FILED UNDER SECTION 66(1) OF
KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE
ORDER DATED 25.08.2022 PASSED IN ORDER No.ZAC-
1/BNG/SMR-31/2021-22 ON THE FILE OF THE ADDITIONAL
COMMISSIONER OF COMMERCIAL TAXES, ZONE-1,
BENGALURU, SETTING ASIDE THE APPEAL AND FILED
AGAINST THE REASSESSMENT ODER DATED 15.10.2019
PASSED IN CAS ORDER No.392381045 PASSED BY THE
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, (AUDIT-1.7)
DGSTO-1 YESHWANTHPUR, BANGALORE, UNDER SECTION
39(1) OF THE KVAT ACT 2003 FOR THE TAX PERIOD FOR
2016-17.
IN STA No.16/2022
BETWEEN:
1. M/S STERLING DEVELOPERS PRIVATE LIMITED,
No.8, LEVEL 5, PRESTIGE NEBULA,
CUBBON ROAD,
BENGALURU 560 001,
RERPESENTED BY
VENKAT RAMANI SASTRI,
DIRECTOR.
...APPELLANT
(BY SRI SURYA KANTH C. S., ADVOCATE)
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-I,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR,
BENGALURU 560 009.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA FILED UNDER SECTION 66(1) OF KARNATAKA
VALUE ADDED TAX ACT 2003 AGAINST THE ORDER DATED
25.08.2022 PASSED IN ORDER No.ZAC-1/BNG/SMR-29/2021-
- 14 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
22 ON THE FILE OF THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-1, GANDHINAGAR, BENGALURU,
SETTING ASIDE THE APPEAL AND FILED AGAINST THE
REASSESSMENT ORDER DATED 30.01.2019 PASSED IN CAS
No.319021019 PASSED BY THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (AUDIT) -1.1, BENGALURU UNDER
SECTION 39(1) OF THE KVAT ACT 2003 FOR THE TAX PERIODS
OF APRIL 2014 TO MARCH 2015.
IN STA No.17/2022
BETWEEN:
1. M/S STERLING DEVELOPERS PRIVATE LIMITED,
NO.8, LEVEL 5, PRESTIGE NEBULA
CUBBON ROAD, BENGALURU 560 001.
RERPESENTED BY
VENKAT RAMANI SASTRI,
DIRECTOR.
...APPELLANT
(BY SRI SURYA KANTH C. S., ADVOCATE)
AND:
1. THE ADDITIONAL COMMISSIONER OF
COMMERCIAL TAXES, ZONE-I,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR, BENGALURU 560 009.
...RESPONDENT
(BY SRI ADITYA VIKRAM BHAT, AGA)
THIS STA IS FILED UNDER SECTION 66(1) OF
KARNATAKA VALUE ADDED TAX ACT 2003 AGAINST THE
ORDER DATED 25.08.2022 PASSED IN ORDER No.ZAC-
1/BNG/SMR-28/2021-22 ON THE FILE OF THE ADDITIONAL
COMMISSIONER OF COMMERCIAL TAXES, ZONE-1,
GANDHINAGAR, BENGALURU, SETTING ASIDE THE APPEAL
AND FILED AGAINST THE REASSESSMENT ODER DATED
30.01.2019 PASSED IN CAS No.309020987 PASSED BY THE
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, (AUDIT)
- 15 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
1.1, DGSTO -1, BENGALURU FILED UNDER SECTION 39(1),
36(1) AND 72(2) OF THE KVAT ACT 2003 FOR THE TAX
PERIODS OF APRIL 2013 TO MARCH 2014.
IN STRP No.182/2018
BETWEEN:
1. THE STATE OF KARNATAKA
REPRESENTED BY THE SECRETARY,
FINANCE DEPARTMENT,
VIDHANA SOUDHA,
BENGALURU - 560001.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S GOLDEN GATE PROPERTIES LIMITED,
No. 820, GOLDEN HOUSE,
80 FEET ROAD, 8TH BLOCK,
KORAMANGALA, BENGALURU - 560095
...RESPONDENT
(BY SRI CHETHAN A. C., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
ORDER DATED 30.10.2017 PASSED IN STA.Nos.604, 605 AND
606/2016 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, PARTLY ALLOWING THE APPEAL
AND PARTLY SETTING ASIDE AND PARLY UPHOLDING THE
ORDER DATED 17.12.2014 PASSED IN VAT.AP.No.124 TO
135/2014-15, VAT Nos.136 TO 147/2014-15 AND VAT
AP.Nos.148 TO 159/2014-15 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERICIAL TAXEX, (APPEALS)
GULBARGA, CAMP AT O/O THE JCCT [APPEALS]-4, SHANTHI
NAGAR, BENGALORE-27 AND ETC.
- 16 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
IN STRP No.25/2019
BETWEEN:
1. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS)-4,
SHANTHINAGAR,
BENGALURU-560 027.
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (AUDIT)-4.5,
VAT DIVISION-4,
BENGALURU-560 047.
...PETITIONERS
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. BREN CORPORATION,
(PREVIOUSLY KNOWN AS SJR ENTERPRISES),
BALAVANA,No.61, 1ST CROSS,
5TH BLOCK, ADJACENT TO
SUKH SAGAR HOTEL,
KORAMANGALA,
BENGALURU-560 095.
...RESPONDENT
(BY SRI K. KUMARESHAN, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT,2003, AGAINST THE
JUDGMENT DATED 20.07.2018 PASSED IN STA No0s.1400 TO
1414/2014 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BANGALORE, PARTLY ALLOWING THE APPEALS
AND FILED AGAINST THE ORDER DATED 15.02.2014 PASSED
IN VAT.AP 143 TO 145/2013-14 AND VAT.AP Nos.146 TO
157/2013-14 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS-4 ), BANGALORE, DISMISSING
THE APPEAL AND UPHOLDING THE ORDER DATED 31.05.2013
PASSED BY THE DEPUTY COMMISSIONER OF COMMERCIAL
TAXES (AUDIT) 4.5, BANGALORE, AND FOR THE TAX PERIODS
- 17 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
OF JANUARY 2011, FEBRUARY 2011 AND MARCH 2011 AND
APRIL 2011 TO MARCH 2012.
IN STRP No.49/2019
BETWEEN:
1. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS),
MANGALURU.
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT-2)
DVO, MANGALORE.
...PETITIONERS
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S SAI RADHA DEVELOPERS (R),
III FLOOR, C J COMPLEX,
K. M. MARG, UDUPI-576101.
...RESPONDENT
(BY SRI M. THIRUMALESH, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 27.08.2018 PASSED IN STA.No.140/2017
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, PARTLY ALLOWING THE APPEAL FILED AGAINST
THE ORDER DATED 16.12.2016 PASSED IN KVAT.AP.No.356
TO 367/2014, ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS) MANGALURU, DISMISSING
THE APPEAL AND UPHOLDING THE ORDER DATED 30.09.2014
PASSED IN 29160392192 ON THE FILE OF THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (AUDIT-2),
MANGALURU, FOR THE TWELVE TAX PERIODS (MONTHS) OF
THE YEAR 2011-12.
- 18 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
IN STRP No.71/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. VILLALAND DEVELOPERS PRIVATE LIMITED,
THE FALCON HOUSE No.01,
MAIN GUARD CROSS ROAD,
BANGALORE 560001.
...RESPONDENT
(BY SRI L. S. KARTHIKEYAN, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUED ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 29.11.2018 PASSED IN STA.No.213/2018
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL AND SETTING ASIDE
THE ORDER DATED 28.02.2018 PASSED IN
VAT.AP.No.60/2016-17 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES (APPEALS)-1
SHANTINAGAR, BENGALURU DISMISSING THE APPEAL AND
UPHOLDING THE RE-ASSESSMENT ORDER AND PENALTY
ORDER DATED 29.06.2016 UNDER SECTION 39(1) AND 72(2)
OF THE KVAT ACT, 2003 BY THE ASSISTANT COMMISSIONER
OF COMMERCIAL TAXES (AUDIT)1.7, DVO-1 BENGALURU FOR
THE TAX PERIODS OF APRIL 2012 TO MARCH 2013.
IN STRP No.72/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALA,
- 19 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
P KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S ASTRO BUILDERS & DEVELOPERS,
No.117/1, RAKSHITA COMPLEX,
SARJAPURA ROAD,
BENGALURU-560035.
...RESPONDENT
(BY SRI UMESH P. E., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 19.03.2019 PASSED IN STA.No.1561 TO
1606/2013 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, ALLOWING THE APPEAL FILED
AGAINST THE ORDER DATED 19.02.2013 PASSED IN
VAT.AP.Nos.414 TO 459/2011-12 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES (APPEALS)
GULBARGA CAMP AT O/O THE JCCT (APPEALS)-4,
BENGALURU, DISMISSING THE APPEAL AND UPHOLDING THE
RE-ASSESSMENT ORDER DATED 09.05.2011 PASSED UNDER
SECTION 39(1) R/W SECTION 72(2) AND 36(10) OF KVAT ACT,
2003 BY THE ASSISTANT COMMISSIONER OF COMMERCIAL
TAXES, (AUDIT) 41, DVO-4, BENGALURU FOR THE TAX
PERIODS OF APRIL 2006 TO FEBRUARY 2009, APRIL 2009 TO
AUGUST 2009, OCTOBER 2009 TO MARCH 2010.
IN STRP No.73/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD,
- 20 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S. ELEGANT PROPERTIES
ELEGANT DESIRE,
1ST FLOOR, #1, COLES ROAD,
FRAZER TOWN,
BENGALURU-560005.
...RESPONDENT
(RESERVED SERVED, UNREPRESENTED)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 20.03.2019 PASSED IN STA.No.3362 TO
3373/2013, STA.No.3374 TO 3383/2013, STA.No.3384 TO
3395/2013 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, PARTLY ALLOWING THE APPEALS
AND SETTING ASIDE THE ORDER DATED 22.10.2013 PASSED
IN JCCT(AM)/DVO-1/SMR/CR-18/2012-13, ON THE FILE OF
THE JOINT COMMISSIONER OF COMMERCIAL TAXES, (ADMN),
BENGALURU ALLOWING THE APPEALS FILED AGAINST THE RE-
ASSESSMENT ORDER DATED 02.07.2010 PASSED BY THE
ASSISTANT COMMISSIONER OF COMMERCIAL RAXES, AUDIT-
16 VAT DIVISION 1 BENGALURU, UNDER SECTION 39(1) OF
THE ACT, LEVYING HIGHER RATE OF TAX, PENALTY AND
INTEREST FOR THE PERIODS APRIL 2006 TO MARCH 2007,
APRIL 2007 TO MARCH 2008, APRIL 2008 MARCH 2009.
IN STRP No.74/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGEKARYALAYA,
P KALINGARAO ROAD,
- 21 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
1ST MAIN ROAD , GANDHINAGAR,
BENGALURU.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. VILLALAND DEVELOPERS PRIVATE LIMITED,
THE FALCON HOUSE No.01,
MAIN GUARD CROSS ROAD,
BANGALORE 560001.
...RESPONDENT
(BY SRI L. S. KARTHIKEYAN, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 29.11.2018 PASSED IN STA.No.6/2016 ON
THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL AND SETTING ASIDE
ORDER DATED 31.10.2015 PASSED IN VAT.AP.No.01/2014-15
ON THE FILE OF THE JOINT COMMISSIONER OF COMMERCIAL
TAXES (APPEALS)-1, SHANTINAGAR, BENGALURU,
DISMISSING THE APPEAL FILED AGAINST THE RE-
ASSESSMENT ORDER DATED 13.03.2015 ON THE FILE OF THE
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES,
(AUDIT)1.6 DVO -1, BENGALURU FOR THE TAX PERIODS OF
APRIL 2013 TO MARCH 2014.
IN STRP No.75/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGEKARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD ,
GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
- 22 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
AND:
1. M/S KEERTHI ESTATES PVT LIMITED
G-1, KEERTHI ORNATTA,
C V RAMAN NAGAR ROAD,
NAGAVARAPALYA,
BENGALURU 560093.
...RESPONDENT
(BY SRI NAVEEN KUMAR K. S., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
ORDER DATED 25.03.2019 PASSED IN STA.No.1687/2014 ON
THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
BENGALURU, ALLOWING THE APPEAL SETTING ASIDE THE
ORDER DATED 19.03.2014 PASSED IN VAT.AP.No.534 TO
545/13-14 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS)-5 BENGALURU, THE
UPHOLDING ORDER DATED 17.01.2014 PASSED BY THE
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, (AUDIT-
5.2) DVO-5, BENGALURU, FOR THE TAX PERIODS APRIL 2011
TO MARCH-2012.
IN STRP No.76/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P KALINGARAO ROAD,
1ST MAIN ROAD,
GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S PURVANKARA PROJECTS LIMITED,
No.130/1,
- 23 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
ULSOOR ROAD,
BENGALURU-560042.
...RESPONDENT
(BY SRI THIRUMALESH M., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT,2003, AGAINST THE
JUDGMENT DATED 21.12.2018 PASSED IN STA CROSS
APPEALS No.1069 TO 1092/2013 ON THE FILE OF THE
KARNATAKA APPELLATE TRIBUNAL AT BANGALORE,
DISMISSING THE CROSS APPEALS AND FILED AGAINST THE
ORDER DATED 22.02.2012 AND 24.02.2012 PASSED IN
VAT.AP.1778 TO 1783/2010-11 AND VAT.AP 1228 TO
1239/2011-12 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS-5 ), BANGALORE, DISMISSING
THE APPEAL AND UPHOLDING THE ASSESSMENT ORDER
DATED 03.09.2010 AND 30.04.2011 PASSED BY THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 51, DVO-05,
BANGALORE, AND FOR THE TAX PERIODS OF APRIL- 2005 TO
SEP-2005, APRIL-2006 TO DEC.2006, JANUARY 2007 TO
MARCH-2007.
IN STRP No.77/2019
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S. MANITO BUILDERS
No.690, 7TH MAIN,
CBI MAIN ROAD,
- 24 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
GANGANAGAR,
BENGALURU-560032.
...RESPONDENT
(BY SRI ATUL K ALUR, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
ORDER DATED 18.12.2018 PASSED IN STA.CROSS APPEAL
No.168/2018 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, DISMISSING THE CROSS APPEAL
FILED AGAINST THE ORDER DATED 31.12.2015 PASSED IN
VAT.AP.No.658 TO 669/14-15 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES, (APPEALS)-5
BENGALURU, PARTLY ALLOWING THE APPEALS AND SETTNG
ASIDE THE ASSESSMENT ORDER DATED 09.01.2015 PASSED
BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES,
(AUDIT-5.6), DVO-5, BENGALURU, FOR THE TAX PERIODS
APRIL 2012 TO MARCH-2013.
IN STRP No.1/2020
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES
VANIJYA THERIGE KARYALAYA,
P KALINGARAO ROAD,
1ST MAIN ROAD, GANDINAGAR
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. ASHWINI BUILDERS,
No.430/B, 10TH CROSS,
21ST MAIN, J P NAGAR,
BENGALURU-560078.
...RESPONDENT
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATKA VALUE ADDED TAX ACT, 2003 AGAINST THE
- 25 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
JUDGEMENT DATED 28.03.2019 PASSED IN STA.No.2825 TO
2832/2012, 2833 TO 2840/2012 ON THE FILE OF THE
KARNATAKA APPELLATE TRIBUNAL AT BENGALURU, PARTLY
ALLOWING THE APPEAL AND SETTING ASIDE THE ORDER
DATED 18.10.2012 ON THE FILE OF THE JOINT COMMISSION
OF COMMERCIAL TAXES, (APPEALS)-3 BENGALURU, PASSED
IN VAT.AP.Nos.1754 TO 1776/2011-12 AND THE ASSESSMENT
ORDER DATED 02.03.2012 PASSED UNDER SECTION 39(1)(a)
OF THE ACT BY THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT) -36, BENGALURU, FOR THE
TAX PERIODS AUGUST -2006 TO MARCH 2007 AND APRIL
2007 TO NOVEMBER 2007 LEVYING TAX, PENALTY AND
INTEREST UNDER SEC.36 AND 72(2) OF THE ACT.
IN STRP No.4/2020
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU-560009.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. PURVANKARA PROJECTS LIMITED,
No.130/1, ULSOOR ROAD,
BENGALURU-560042.
...RESPONDENT
(BY SRI THIRUMALESH M., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 07.02.2019 PASSED IN STA.No.2896 TO
2907/2013, 2908 TO 2919/2013, 2910 TO 2931/2013, 2932
TO 2943/2013 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, ALLOWING THE APPEAL FILED
AGAINST THE ORDER DATED 30.09.2013 PASSED IN
- 26 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
VAT.AP.1363 TO 1374/2011-12, VAT.AP.1293 TO 1304/2011-
12 VAT.AP.1375 TO 1386/2011-12 AND VAT.AP.176 TO
187/2012 ON THE FILE OF THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS) BENGALURU, DISMISSING
THE APPEALS AND UPHOLDING THE ASSESSMENT ORDER
DATED 30.04.2011, 09.08.2011, 28.07.2011 AND 08.11.2012
PASSED UNDER SECTION 39(1) OF THE KVAT ACT,2003 AND
CONSEQUENTIAL LEVY OF INTEREST AND PENALTY BY THE
DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-51,
BENGALURU (HEREIN AFTER REFERRED IN SHORT AS THE AA)
FOR THE TAX PERIOD OF APRIL 2007 TO MARCH 2008, APRIL
2008 TO MARCH 2009, APRIL 2009 TO MARCH 2010 AND
APRIL 2010 TO MARCH 2011 RESPECTIVELY.
IN STRP No.5/2020
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALA,
P.KALINGARAO ROAD,
1ST MAIN ROAD,
GANDHINAGAR,
BENGALURU
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S NERMITEE CONSTRUCTIONS,
508, 9TH CROSS,
SADASHIVANAGAR,
BENGALURU-560080.
...RESPONDENT
(BY SRI K. M. SHIVAYOGISWAMY, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 01.04.2019 PASSED IN STA No.9/2011 ON
THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
- 27 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
BENGALURU, ALLOWING THE APPEAL AND SETTING ASIDE
THE ORDER DATED 30.11.2010 PASSED IN
VAT.AP.No.1851/2010-11 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES (APPEALS)-1
BENGALURU UNDER SECTION 62(6) OF THE ACT, PARTLY
ALLOWING THE APPEAL AND PARTIALLY CONFIRMING THE RE-
ASSESSMENT ORDER DATED 28.09.2010 ON THE FILE OF THE
DEPUTY COMMISSIONER OF COMMERCIAL TAXES (RECOVERY)
-21 DVO 2 BENGALURU FOR THE TAX PERIODS APRIL 2006 TO
MARCH 2007 LEVYING TAX, PENALTY AND INTEREST UNDER
SECTION 36 AND 72(2) OF THE ACT.
IN STRP No.6/2020
BETWEEN:
1. THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P. KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S. SUMON ASSOCIATES,
No.208, BARON CENTER,
84/1, M.G. ROAD,
BANGALORE 560 001.
...RESPONDENT
(BY SMT. ANUPARNA BORDOLOI, ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUED ADDED TAX ACT, 2003 AGAINST THE
JUDGMENT DATED 25.03.2019 PASSED IN STA.No.871 TO
884/2014 ON THE FILE OF THE KARNATAKA APPELLATE
TRIBUNAL AT BENGALURU, ALLOWING THE APPEAL AND
SETTING ASIDE THE ORDER DATED 12.02.2014 PASSED IN
VAT.P.No.696 TO 709/10-11 ON THE FILE OF THE JOINT
- 28 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
COMMISSIONER OF COMMERCIAL TAXES (APPEAL)-1
BENGALURU AND THE RE-ASSESSMENT ORDER DATED
10.06.2010 PASSED ON THE FILE OF THE DEPUTY
COMMISSIONER OF COMMERCIAL TAXES (DM-11) BENGALURU
FOR THE TAX PERIODS OF APRIL 06, JUNE 06, AUGUST 06,
SEPTEMBER 06, OCTOBER 06, NOVEMBER 06, DECEMBER 06,
APRIL 07 TO JULY 07, SEPTEMBER 07, OCTOBER 07 AND APRIL
2008.
IN STRP No.18/2020
BETWEEN:
1. THE STATE OF KARNATAKA,
REPRESENTED BY THE COMMISSIONER
OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
P KALINGARAO ROAD,
1ST MAIN ROAD, GANDHINAGAR,
BENGALURU-560001.
...PETITIONER
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. SRI H. S. HARIKRISHNA,
PROPRIETOR,
M/S GAANA BUILDERS AND DEVELOPERS,
No.5, 12TH CROSS,
S. P. EXTENSION,
MALLESHWARAM,
BENGALURU-560003.
...RESPONDENT
(VIDE ORDER DATED 30.09.2022 NOTICE TO
RESPONDENT IS HELD SUFFICIENT)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT,2003, AGAINST THE
JUDGMENT DATED 27.09.2019 PASSED IN STA No.2044/2011
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL AT
- 29 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
BANGALORE, PARTLY ALLOWING THE APPEAL AND
CHALLENGING THE ORDER DATED 12.05.2011 PASSED IN
VAT.AP.Nos. 1803/10-11 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES (APPEALS-1),
BANGALORE, DISMISSING THE APPEAL AND FILED AGAINST
THE RE-ASSESSMENT ORDER DATED 14.10.2010 PASSED BY
THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES
(AUDIT) 12, DVO-1, BANGALORE, AND FOR THE TAX PERIOD
OF SEPTEMBER 2005.
IN STRP No.2/2022
BETWEEN:
1. THE ASSISTANT COMMISSIONER OF
COMMERCIAL TAXES (AUDIT 1.3),
DVO-1, YESHWANTHPUR,
BANGALORE 560022.
2. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEALS 1),
SHANTHINAGAR,
BANGALORE-560 027.
...PETITIONERS
(BY SRI ADITHYA VIKRAM BHAT, AGA)
AND:
1. M/S MILLENNIA VENTURES AND
PROJECTS PVT. LTD.
No.328/B, 14TH CROSS,
5TH MAIN, SADASHIVANAGAR,
BANGALORE-560 008.
REP. ITS PROPRIETOR.
...RESPONDENT
(BY SMT. VANI H., ADVOCATE)
THIS STRP IS FILED UNDER SECTION 65(1) OF THE
KARNATAKA VALUE ADDED TAX ACT, 2013 PASSED IN
STA.No.275/2018 ON THE FILE OF THE KARNATAKA
APPELLATE TRIBUNAL AT BENGALURU, ALLOWING THE
- 30 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
APPEAL AND SETTING ASIDE THE JUDGMENT AND DECREE
DATED 31.05.2018 PASSED IN VAT.AP.No.72/2017-18 ON THE
FILE OF THE JOINT COMMISSIONER OF COMMERCIAL TAXES,
DISMISSING THE APPEAL AND UPHOLDING THE RE-
ASSESSMENT ORDER DATED 29.06.2017 PASSED BY THE
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES,
BENGALURU, FOR THE TAX PERIOD 2013-14.
THESE PETITIONS AND APPEALS HAVING BEEN HEARD
AND RESERVED FOR ORDER ON 20.02.2026 COMING ON THIS
DAY, S.G.PANDIT J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT
and
HON'BLE MR. JUSTICE K. V. ARAVIND
C.A.V. JUDGMENT
(PER: HON'BLE MR. JUSTICE S.G. PANDIT)
The above Sales Tax Revision Petitions, Sales Tax
Appeals involve common questions of law, hence, heard
together with the consent of learned counsel appearing for
the parties and disposed of by this common judgment.
2. The Sales Tax Revision Petitions are against the
orders passed by the Karnataka Appellate Tribunal,
Bengaluru (for short, 'the Tribunal'); the Sales Tax Appeals
are against the orders passed in a suo-motu revision under
Section 65 of the Karnataka Value Added Tax Act, 2003 (for
- 31 -
STRP No. 181 of 2018
C/W RP No. 403 of 2025
RP No. 404 of 2025
AND 26 OTHERS
short, 'KVAT Act') and the Review Petitions are by the
Revenue seeking review of judgment dated 02.04.2025 in
STA.No.18/2022 C/w. STA.No.19/2022 and
STA.No.20/2022 (DB).
3. Since the questions of law in all the above
petitions and appeals are identical, at the request of the
Bench, learned counsel appearing for the parties formulated
common questions of law and submitted that decision on
the said common questions of law would govern all the
above appeals and petitions. The common questions of law
involved in the above appeals and petitions are as follows:
"1. Whether a joint development agreement ("JDA")
entered into between a landowner and a developer is
a works contract taxable under the provisions of the
KVAT Act?
2. Whether the transaction/ joint development
agreement between the landowner and the developer
amounts being a 'barter/exchange' amounts to 'sale'
of goods within the definition in section 2(29) of the
KVAT Act, 2003?
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3. Whether the disallowance of exemption of the value
of the undivided share of land received from the
purchasers of the developer's share of flats, as done
by the assessing authority / revisional authority
amounts to levy of VAT on immovable property/land,
which the State Legislature lacks the power to tax
under Entry 54 of List II of the Seventh Schedule of
the Constitution of India?
4. Without prejudice, assuming but without admitting
that the transaction is indeed a works contract,
whether in the absence of a method to value the
goods incorporated in the works contract under the
KVAT Act and the Rules, the charge fails?
5. Whether under the composition scheme any
deductions not contemplated by the statute are
permissible?"
For the sake of convenience, facts of STRP.No.181/2018 are
referred to.
4. The petitioner namely, M/s. Vaswani Estate
Developer (P) Ltd., (developer) is a private limited company
engaged in the business of development, construction,
execution of works contracts for residential apartments and
sale thereof.
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5. A proposition notice under Section 39(1) of KVAT
Act dated 01.06.2010 was issued by the Adjudicating
Authority proposing reassessment on the ground that the
total and taxable turnover, pertaining to the value of goods
used in the execution of works contracts and the value of
goods relating to the land owners' share of flats in
pursuance to the Joint Development Agreement (JDA) had
not been correctly and fully disclosed by the dealer.
Questioning the said proposition notice, the dealer
approached this Court by way of writ petition which was
withdrawn. Subsequent to withdrawal of writ petition, the
dealer filed objections to the proposition notice and the
Adjudicating Authority rejected the objections, confirmed
the proposal and proceeded to demand tax as well as levied
penalty and interest. Once again aggrieved by the said
order, the dealer was before this Court in writ petition,
which was also withdrawn to file an application under
Section 39(1) of the KVAT Act seeking clarification. The said
rectification application was allowed partly, allowing certain
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deductions. Questioning the partial rejection of the
rectification application by order dated 19.10.2010, the
dealer preferred appeal before the Tribunal and against the
order of the Tribunal the present Revision Petitions.
6. Heard learned Additional Government Advocate
Sri.Aditya Vikram Bhat for Revenue, learned senior counsel
Sri.T.Surya Narayana for learned counsel Smt.Tanmayee
Rajkumar, learned counsel Sri.Raghavendra.C.R., learned
counsel Sri. G.Sridhar, Sri.Atul Krishna Rao Alur, learned
counsel Sri.Surya Kanth.C.S., learned counsel
Sri.Chethan.A.C., learned counsel Sri.K.Kumareshan,
learned counsel Sri.M.Thirumalesh, learned counsel Sri
L.S.Karthikeyan, learned counsel Sri.Umesh.P.E., learned
counsel Sri.Naveen Kumar.K.S., learned counsel
Sri.K.M.Shivayogiswamy, learned counsel Smt.Anuparna
Bordoloi and learned counsel Smt.Vani.H., Perused the
entire papers.
7. Learned Additional Government Advocate
contends that the taxable turnover shall include the value of
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all the flats constructed by the dealer/developer and cost of
the land cannot be excluded from the taxable turnover. It is
submitted that the dealer opted for the Composition
Scheme, as such, question of adjudicating or excluding land
cost would not arise. Learned Additional Government
Advocate invites attention of this Court to Sub-Section (29)
of Section 2 of the KVAT Act, the definition of sale and
submits that it includes works contracts and construction
activities and that a sale may be for any valuable
consideration. Learned Additional Government Advocate
further contends that JDA is a works contract and the
transfer of an undivided right in the land in favour of the
builder or its nominee/agent is for consideration, as the
land owner, for the said transfer of land would receive
proportionate built-up area which shall be the consideration.
Therefore, it is submitted that land cost forms part of the
turnover and the dealer cannot seek deduction of the said
land cost.
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8. Learned Additional Government Advocate further
submits that the dealer having opted for the composition
scheme is liable to pay tax by way of a fixed composition
amount in lieu of regular tax, without claiming any
deductions, except the deductions expressly permitted
under Sub-Section (5) of Section 15 of the KVAT Act, which
would not include deduction towards the cost of land.
9. Learned Additional Government Advocate would
submit that it is an admitted fact that JDA exists between
dealer/developer and the land owner. It is further submitted
that the developer has executed works contract for the land
owner by transferring goods in the course of construction of
apartments, and as consideration land owner through
General Power of Attorney (GPA) has authorized developer
to receive the consideration from the flat buyers by way of
sale of proportionate undivided share in the land. It is
further contended that for the transfer of goods involved in
the construction of apartments for the land owner, the
developer has in effect received works contracts
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consideration from the buyers, as such, receipts should be
included in the taxable turnover, by treating it as land cost.
10. Per contra, learned senior counsel
Sri.T.Suryanarayana with Smt.Tanmayee Rajkumar, learned
counsel for the respondent/assessee would submit that JDA
entered into between the land owner and the developer at
any stretch of imagination cannot be considered as works
contract and placing reliance on LARSEN AND TOUBRO
LIMITED., VS. STATE OF KARNATAKA1 submits that the
State had conceded that a JDA is not a works contract.
Further, learned senior counsel would submit that the works
contract is between the developer and the purchasers of
flat. It is submitted that developer receives consideration
towards the cost of construction and the value of the
undivided share in the land, whereas in a JDA there is no
element of sale of goods involved in the execution of a
works contract, as the transaction essentially pertains to
the transfer of immovable property. Learned senior counsel
1
(2015) 1 SCC 708
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invites attention to Circular No.121/2009-10 dated
07.12.2009 which treated JDA as works contract, which has
no statutory force to impose tax liability and further submits
that prior to the said circular, JDA was not treated as works
contract. It is further contended that, the KVAT Act permits
levy on the sale of goods as defined under Section 2(29) of
KVAT Act which requires a transfer of property in goods for
cash or other valuable consideration in the course of
execution of a works contract. It is specifically contended
that under JDA, it is sale or exchange of an undivided share
in land, consideration being the share in the built-up area in
the construction by the developer, therefore, it could be at
the best would be sale/exchange of immovable property.
11. Learned senior counsel referring to Section 2(29)
as well as Section 2(37) of KVAT Act submits that sale as
well as works contract are defined separately and every
agreement for construction of a building would not
necessarily amount to works contract. Normally under JDA,
the developer would not undertake any work for the land
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owner. Therefore, it is submitted that JDA is an agreement
for the sale of immovable property and not for execution of
a works contract. Further, learned senior counsel would
submit that the transaction between the developer and land
owner at the best could be considered as barter or
exchange but not a sale. It is submitted that the word
"supply" under the provisions of the Goods and Services
Act, 2017 (for short, 'GST Act') expressly includes
transactions by way of barter and exchange. To consider it
as a sale, there is no monetary consideration. Again
referring to Section 2(29) of the KVAT Act and the words
"other valuable consideration" appearing in the said
Section, submits that it is to be understood in the context of
monetary payments and cannot include transactions in the
nature of exchange or barter and in that regard, reliance is
placed on the decisions in DEVI DASS GOPAL KRISHNAN
VS. STATE OF PUNJAB2 and SALE TAX COMMISSIONER,
W.P., VS. RAM KUMAR AGARWAL3.
2
(1967) 20 STC 430
3
(1967) 19 STC 400
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12. Learned senior counsel would also question the
competence of the State to levy the tax on land by
submitting that it is beyond the State's power as conferred
under Entry 54 of List-II of the Seventh Schedule to the
Constitution of India. It is submitted that it is impermissible
to levy tax on the transfer of immovable property by
treating it as a works contract. Learned senior counsel lastly
submits that KVAT Act would not provide for any
mechanism for the valuation of the goods involved in the
execution of a works contract and as such, charging
provision cannot be given effect to. It is submitted that the
mechanism for computation must be expressly provided
along with the charging section and it cannot be
supplemented by executive instructions. Learned senior
counsel would submit that in the instant case as the charge
and mechanism for computation are through a Circular, it
lacks statutory force. In that regard, he places reliance on
the decision of the Hon'ble Apex Court in the case of
COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS,
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4
KERALA VS. LARSEN AND TOUBRO LIMITED and
DHINGRA JARDINE INFRASTRUCTURE (P.) LTD., VS.
5
STATE OF HARYANA .
13. Sri.Atul K. Alur, learned counsel appearing for
assessee in STA.No.8/2022, STA.No.9/2022 and
STA.No.10/2022 submitted that though initially JDA is
entered into, the entire extent of land is purchased by the
developer subsequently. Further, he contends that cost of
land cannot be included in the taxable turnover.
14. Sri.Sridhar, learned counsel appearing in
STA.No.133/2012 submits that, Revisional Authority
without any basis reversed the reassessment order.
Further, he contends that valuable consideration must
necessarily involve monetary payment and the transfer of
land in exchange for a share in the built-up area amounts to
barter or exchange and would not fall within sale under
KVAT Act.
4
(2016) 1 SCC 170
5
(2017) 78 Taxmann.Com 6 (Punjab and Haryana)
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15. We have given our thoughtful consideration to
the submissions of the learned counsel appearing for the
parties and perused the entire material on record.
16. The relevant provisions which are germane for
the determination of the issue involved in the above
appeals and petitions are as follows:
Section 2(29) of the KVAT Act
"(29) 'Sale' with all its grammatical variation and
cognate expressions means every transfer of the
property in goods (other than by way of a mortgage,
hypothecation, charge or pledge) by one person to
another in the course of trade or business for cash or
for deferred payment or other valuable consideration
and includes, -
(a) a transfer otherwise than in pursuance of a
contract of property in any goods for cash,
deferred payment or other valuable
consideration;
(b) a transfer of property in goods (whether
as goods or in some other form) involved
in the execution of a works contract;
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(c) a delivery of goods on hire purchase or
any system of payment by installments;
(d) a transfer of the right to use any goods for
any purpose (whether or not for a
specified period) for cash, deferred
payment or other valuable consideration.
Explanations.- (1) A transfer of property
involved in the sale or distribution of goods by a
society (including a co-operative society), club, firm,
or any association to its members, for cash, or for
deferred payment or other valuable consideration,
whether or not in the course of business, shall be
deemed to be a sale for the purposes of this Act.
(2) Every transaction of sale by way of or as
a part of any service or in any other manner
whatsoever, of goods, being food or any other article
of human consumption or any drink (whether or not
intoxicating) where such sale or service is for cash,
deferred payment or other valuable consideration,
shall be deemed to be a sale of those goods by the
person making the sale and purchase of those goods
by the person to whom such sale is made.
(3) Notwithstanding anything to the contrary
contained in this Act or any other law for the time
being in force, two independent sales or purchases
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shall, for the purposes of this Act, be deemed to
have taken place,
(a) when the goods are transferred from a
principal to his selling agent and from the
selling agent to the purchaser, or
(b) when the goods are transferred from the seller
to a buying agent and from the buying agent to
his principal, if the agent is found in either of
the cases aforesaid, -
(i) to have sold the goods at one rate and to
have passed on the sale proceeds to his
principal at another rate, or
(ii) to have purchased the goods at one rate
and to have passed them on to his
principal at another rate, or
(iii) not to have accounted to his principal for
the entire collections or deductions made
by him in the sales or purchases effected
by him on behalf of his principal, or
(iv) to have acted for a fictitious or non-
existent principal.
(4) Every transfer of property in goods by the
Central Government, any State Government, a
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statutory body or a local authority for cash or for
deferred payment or other valuable consideration,
whether or not in the course of business, shall be
deemed to be a sale for the purposes of this Act."
Section 2(15) of the KVAT Act
"(15) 'Goods' means all kinds of movable
property (other than newspaper, actionable claims,
stocks and shares and securities) and includes
livestock, all materials, commodities and articles
(including goods, as goods or in some other form)
involved in the execution of a works contract or
those goods to be used in the fitting out,
improvement or repair of movable property, and all
growing crops, grass or things attached to, or
forming part of the land which are agreed to be
severed before sale or under the contract of sale."
Section 2(34) of the KVAT Act
(34) 'Taxable turnover' means the turnover
on which a dealer shall be liable to pay tax as
determined after making such deductions from his
total turnover and in such manner as may be
prescribed, but shall not include the turnover of
purchase or sale in the course of interstate trade or
commerce or in the course of export of the goods out
of the territory of India or in the course of import of
the goods into the territory of India and the value of
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goods transferred or despatched outside the State
otherwise than by way of sale.
Section 2(36) of the KVAT Act
(36) 'Turnover' means the aggregate amount
for which goods are sold or distributed or delivered
or otherwise disposed of in any of the ways referred
to in clause (29) by a dealer, either directly or
through another, on his own account or on account
of others, whether for cash or for deferred payment
or other valuable consideration, and includes the
aggregate amount for which goods are purchased
from a person not registered under the Act and the
value of goods transferred or despatched outside the
State otherwise than by way of sale, and subject to
such conditions and restrictions as may be prescribed
the amount for which goods are sold shall include
any sums charged for anything done by the dealer in
respect of the goods sold at the time of or before the
delivery thereof.
Explanation. - The value of the goods
transferred or despatched outside the State
otherwise than by way of sale, shall be the amount
for which the goods are ordinarily sold by the dealer
or the prevailing market price of such goods where
the dealer does not ordinarily sell the goods.
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Section 2(37) of the KVAT Act
(37) 'Works contract' includes any
agreement for carrying out for cash, deferred
payment or other valuable consideration, the
building, construction, manufacture, processing,
fabrication, erection, installation, fitting out,
improvement, modification, repair or commissioning
of any movable or immovable property.
Rule 3(1)(c) of the KVAT Rules
3. Determination of turnover - (1) The total
turnover of a dealer, for the purposes of the Act,
shall be the aggregate of.
(a) xxx
(b) xxx
(c) the total amount paid or payable to the
dealer as the consideration for transfer of property in
goods (whether as goods or in some other form)
involved in the execution of works contract including
any amount paid as advance to the dealer as a part
of such consideration;
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Rule 3(2)(1) and 3(2)(m) of the KVAT
Rules
3. Determination of turnover -
(1) xxx
(2) The taxable turnover shall be
determined by allowing the following
deductions from the total turnover.-
Xxx xxx
Xxx xxx
(1) All amounts actually expended towards
labour charges and other like charges not involving
any transfer of property in goods in connection with
the execution of works contract including charges
incurred for erection, installation, fixing, fitting out or
commissioning of the goods used in the execution of
a works contract.
(m) Such amounts calculated at the rate
specified in column (3) of the Table below towards
labour charges and other like charges as incurred in
the execution of a works contract when such charges
are not ascertainable from the books of accounts
maintained by a dealer.
Column xxx
Explanation I: Where the turnover of a dealer
claiming deduction under clause (I)in any tax period
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is not sufficient to cover the deduction, it shall be
allowed to the extent of the turnover of the dealer in
that period, and the balance shall be carried forward
to the following tax period or any subsequent tax
period.
Explanation II: For the purpose of clause (1),
"labour and other like charges" include charges for
obtaining, on hire or otherwise, machinery and tools
used in the execution of a works contract, charges
for planning, designing and architects' fees, cost of
consumables used in the execution of the works
contract, cost of establishment to the extent
relatable to supply of labour and services and other
similar expenses relatable to supply of labour and
services.
Explanation III: For the purpose of clause (1),
gross profit earned by a dealer shall be apportionable
to the value of the goods and labour and other like
charges involved in the execution of a works contract
in the same ratio as in the total turnover.
Explanation IV. - The deduction under clauses (d)
and (3) shall be allowed in the return to be furnished
for the tax period in which the goods are Returned
by the purchasers or the dealer as the case may be.
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Article 366(29A) (b) of Constitution of
India
(29A)"tax on the sale or purchase of goods"
includes--
(a) XXX
(b) a tax on the transfer of property in goods
(whether as goods or in some other
form) involved in the execution of a
works contract;"
17. It would also be necessary to take note of the
relevant Clauses of the JDA to properly apply the provisions
of law and also to decide the issue. The same are
reproduced hereunder:
"5. CONVEYANCE OF UNDIVIDED RIGHT IN
LAND
The owners hereby agree and confirm that
they shall convey to the Developer or its nominees
or assigns 65% of the undivided right, title and
interest in the Schedule Property (for short
hereinafter referred to as the Developer's
Allocation) as hereinafter defined by executing one
or more Sale deed/s in favour of the Developer or
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its nominees or assigns and also appear before the
Sub-Registrar and admit execution of the Sale Deed
or Sale Deeds either directly or through the General
Power of Attorney duly to be executed in favour of
the nominee/s or Director/s of the Developer herein
as per the Developer's preference.
6. SHARING OF BUILT AREA
6.1 In consideration of the Owners agreeing
to convey 65% of the undivided share, right, title
and interest in the Schedule property together with
right 65% of the Car Parking slots to the Developer
or its nominees and similarly, the Developer agrees
to construct and deliver to the owners 35% of the
saleable super built area together with 35% of the
Car Parking for the absolute use und or benefit and
ownership of the Owners.
8: COST OF CONSTRUCTION
The entire cost of construction of the Project
in the Schedule Property shall be borne by the
Developer. The Owners shall not be required to
contribute any amount for the construction.
20. SPECIFIC PERFORMANCE
In case of breach of trust and terms
committed by any of the parties hereto against the
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other, the aggrieved Party shall have above option
of arbitration and shall have course of the right of
seeking specific performance of this JDA from the
Party who committed such breach of trust as per
this JDA and also be entitled to recover all losses,
damages, consequential costs and expenses so
incurred as consequence of such breach from the
party committing the breach.
21. GENERAL PROVISIONS
21.1 Nothing contained herein shall be
deemed or construed as a partnership between the
Owners and the Developer or a Joint Venture or an
association or persons. Each party hereto shall be
strictly responsible for its income, wealth, gift taxes
and other duties."
18. A perusal of the JDA as extracted above makes it
clear that the owner has agreed to convey or transfer to the
developer or its nominees 65% of the undivided right, title
and interest of the schedule property and the developer as
consideration has agreed to construct and deliver to the
owners 35% of the salable super built-up area, together
with 35% of the car parking spaces for the absolute use,
benefit and ownership of the landlord/owner.
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Regarding Question of Law No.1:
19. In terms of Section 2(29) of the KVAT Act, 'sale'
would mean transfer of property in goods by one person to
another in the course of trade or business for cash, deferred
payment or other valuable consideration and includes the
transfer of property in goods involved in the execution of a
works contract. 'Works contract' in terms of Section 2(37)
of the KVAT Act includes any agreement for carrying out,
for cash deferred payment or other valuable consideration,
the building, the construction, manufacture, processing,
fabrication, erection, installation, fitting out, improvement,
modification, repair or commissioning of any movable or
immovable property. In the light of the above, the question
is, whether there exists a works contract under the JDA and
if so, whether the same would amount to a sale within the
meaning of the KVAT Act?
20. In an identical fact situation, the Hon'ble Apex
Court in K.RAHEJA DEVELOPMENT CORPORATION VS.
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6
STATE OF KARNATAKA , at paragraphs 17, 18, 19 and 20,
observed as follows:
"17. We have heard the parties, perused the
various documents and considered the cases cited at
the Bar. As has been rightly submitted by Mr Hegde
the definition of the term "works contract" in the said
Act is an inclusive definition. It does not Include
merely a works contract as normally understood. It
is a wide definition which includes "any agreement"
for carrying out building or construction activity for
cash, deferred payment or other valuable
consideration. The definition does not make a
distinction based on who carries on the construction
activity. Thus even an owner of the property may
also 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.
We, therefore, do not need to go into the question
whether the appellants are owners as even if the
appellants are owners to the extent that they have
entered into agreements to carry out construction
activity on behalf of somebody else for cash,
deferred payment or other valuable consideration,
they would be carrying out a works contract and
would become liable to pay turnover tax on the
transfer of property in the goods involved in such
6
(2005) 5 SCC 162
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works contract. Further under the said Act there is
no distinction between construction of residential
flats or commercial units. Thus, a works contract,
within the meaning of the term in the said Act, can
also be for construction of commercial units. For the
purposes of considering whether an agreement
amounts to a works contract or not, the provisions of
the Karnataka Ownership Flats (Regulation of the
Promotion of Construction, Sale, Management and
Transfer) Act, 1972 will have no relevance.
18. However as Mr Mehta has argued on this
aspect we record that reliance on the judgments in
Podar Cement Ltd. [(1997) 5 SCC 482] and Mysore
Minerals Ltd. [(1999) 106] cases are of no assistance
to the appellants. Those are cases under the Income
Tax Act. Those 7 SCC cases lay down that the term
"owner" must be given an interpretation in the
context of the provisions of the Act. If that rationale
was to be applied then in the context of the
Karnataka Sales Tax Act, the appellants would not be
owners as admittedly they do not have any
registered sale deeds in their hand. The agreement
relied upon by Mr Mehta between the appellants and
the owners of the land is nothing but a development
agreement. Pursuant to such an agreement, plan
would be got sanctioned in the name of the owner of
the property. It would be the owner of the property
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who would then execute a conveyance directly to the
society of purchasers. All that the appellants have is
a possessory interest and a right to construct. Such
rights do not constitute the person as an owner of
the property.
19. To consider whether the appellants are
executing works contract one needs to look at a
typical agreement entered into with the purchaser.
The relevant clauses are clauses (q), (r) of the
recitals and clauses 1, 5(c) and 7, which read as
follows:
"(q)(i) Construction of the said multi-storeyed
building.
(ii) Sale of the units in the aforesaid multi-
storeyed building to different persons in whose
favour ultimately a deed of conveyance would be
obtained by the holders, directly from the vendors,
of an undivided fractional interest in the said land
(i.e. the area of 5910.17 sq meters described in the
First Schedule hereunder written) and such owner of
units would own, on ownership basis, the respective
units on condition that an agreement would be
entered into between the holders on the one hand
and the persons (desiring to acquire on ownership
basis a unit in such multi-storeyed building) on the
other hand and it would be an essential, integral and
basic concept, term and condition of the proposed
transaction (which would be by way of a package
deal not capable of being segregated or separated or
terminated, one without the corresponding effect on
the other) that K. Raheja Development Corporation
as the landholder would agree to sell to such
persons an undivided fractional interest in the said
land described in the First Schedule hereunder
written on condition that they i.e. M/s K. Raheja
Development Corporation as developers on behalf of
and as developers of such person would construct
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for, as a unit ultimately to belong to such person a
unit or units that would be so mutually selected and
settled by and between K. Raheja Development
Corporation and the person concerned.
(r) The prospective purchaser is interested in
acquiring ownership rights in respect of Unit/s 1101
on the eleventh floor/s of the said multi-storeyed
building named 'Raheja Towers' and also Car Parking
Space/s No./s nil in the basement/ground floor of
the said building (hereinafter referred to as 'the said
unit').
***
1. As and by way of a package deal:
(a) K. Raheja Development Corporation (as
holders), agree to sell to the prospective purchaser
an undivided 0.42% share, right, title and interest in
the said land described in the First Schedule
hereunder written (with no right to the prospective
purchaser to claim any separate sub-division and/or
right to exclusive possession of any portion of the
said land) for a lump sum agreed and quantified
consideration of Rs 3,25,000 (Rupees three lakhs
twenty-five thousand only) to be paid by the
prospective purchaser to the holders at the time and
in the manner stated in clause 2 hereof.
(b) K. Raheja Development Corporation (as
developers) agree to build the said building named
'Raheja Towers', having the specifications and
amenities therein set out in the Second Schedule
hereunder written and as developers for the
prospective purchaser, the developers shall build for
and as unit/s to belong to the prospective purchaser,
the said premises (details whereof are set out in the
Third Schedule hereunder written) for a lump sum
agreed and quantified consideration of Rs 5,07,000
(Rupees five lakhs seven thousand only) to be paid
by the prospective purchaser to the developers at
the time and in the manner set out in clause 3
hereof. The said premises shall have the amenities
set out in the Fourth Schedule hereunder written:
***
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5. The under mentioned terms and provisions
are express conditions to be observed, performed
and fulfilled by the prospective purchaser, on the
basis of which this agreement has been entered into
by the holders/developers and the due and proper
fulfilment whereof are to be conditions precedent to
any title being created and/or being capable of being
documented by the prospective purchaser in the
aforesaid fractional interest in the land described in
the First Schedule hereunder written and/or in the
said premises:
(a)-(b)***
(c) The overall control and management of
the project and the development and completion of
the said building shall be with the developers and
furthermore the developers are and shall continue to
be in possession of the said land and building and
shall be entitled to a lien thereon and that the
prospective purchaser shall not be entitled to claim
or demand from the holders possession of any
portion of the said land or to claim or demand from
the developers possession of the said premises
unless and until the prospective purchaser has paid
in full through the holders the full consideration
money payable to the holders under clause 2 above
and the full consideration money payable to the
developers under clause 3 above.
***
7. If the prospective purchaser commits
default in payment of any of the instalments of
consideration aforesaid on their respective due dates
(time being the essence of the contract) and/or in
observing and performing any of the terms and
conditions of this agreement, the holders/developers
shall be at liberty, after giving 15 days' notice
specifying the breach and if the same remains not
rectified within that time, to terminate this
agreement, in which event, a sum equivalent to 10%
of the amounts that may till then have been paid by
the prospective purchaser to the holders and the
developers respectively shall stand forfeited. The
holders and the developers shall, however, on such
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termination, refund to the prospective purchaser the
balance amounts of the Instalments of part-
payment, if any, which may have till then been paid
by the prospective purchaser to the holders and the
developers respectively but without any further
amount by way of interest or otherwise. On the
holders/developers terminating this agreement
under this clause, they shall be at liberty to dispose
of the said unit/s and the said fractional interest in
the land to any other person as they deem fit, at
such price as they may determine and the
prospective purchaser shall not be entitled to
question such sale, disposal or to claim any amount
from them."
(emphasis supplied)
20. Thus the appellants are undertaking to
build as developers for the prospective purchaser.
Such construction/development is to be on payment
of a price in various instalments set out in the
agreement. As the appellants are not the owners
they claim a "lien" on the property. Of course, under
clause 7they have right to terminate the agreement
and to dispose of the unit if a breach is committed by
the purchaser. However, merely having such a clause
does not mean that the agreement ceases to be a
works contract within the meaning of the term in the
said Act. All that this means is that if there is a
termination and that particular unit is not resold but
retained by the appellants, there would be no works
contract to that extent. But so long as there is no
termination the construction is for and on behalf of
the purchaser. Therefore, it remains a works contract
within the meaning of the term as defined under the
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said Act. It must be clarified that if the agreement is
entered into after the flat or unit is already
constructed, then there would be no works contract.
But so long as the agreement is entered into before
the construction is complete it would be a works
contract."
21. Taking note of the principles laid down by the
Hon'ble Apex Court in the above decision, if the developer
undertakes construction for a prospective purchaser for
consideration, such an agreement would constitute a works
contract. But, the aforesaid view was doubted by the
Hon'ble Apex Court in the case of Larsen and Toubro
Limited Vs. State of Karnataka7 and the matter was
referred to a Larger Bench. The relevant observation are as
under:
"10. In the present case the Department has
placed reliance essentially on para 20 of the
judgment in Raheja Development case [(2005) 5
SCC 162] which reads as under: (SCC p. 171)
"20. Thus the appellants are undertaking to
build as developers for the prospective purchaser.
Such construction/development is to be on payment
of a price in various instalments set out in the
agreement. As the appellants are not the owners
7
(2008) 17 SCC 199
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they claim a 'lien' on the property. Of course, under
Clause 7 they have right to terminate the agreement
and to dispose of the unit if a breach is committed
by the purchaser. However, merely having such a
clause does not mean that the agreement ceases to
be a works contract within the meaning of the term
in the said Act. All that this means is that if there is
a termination and that particular unit is not resold
but retained by the appellants, there would be no
works contract to that extent. But so long as there is
no termination the construction is for and on behalf
of the purchaser. Therefore, it remains a works
contract within the meaning of the term as defined
under the said Act. It must be clarified that if the
agreement is entered into after the flat or unit is
already constructed, then there would be no works
contract. But so long as the before the agreement is
entered into construction is complete it would be a
works contract."
(emphasis supplied)
We have prima facie some difficulty in
accepting the proposition laid down in para 20
quoted above. Firstly, in our view, prima facie, M/s
Larsen & Toubro, the petitioner herein, being a
developer had undertaken the contract to develop
the property of Dinesh Ranka. Secondly, the show-
cause notice proceeds only on the basis that the
tripartite agreement is a works contract. Thirdly, in
the show-cause notice there is no allegation made by
the Department that there is monetary consideration
involved in the first contract which is the
development agreement.
11. Be that as it may, apart from the disputes
in hand, the point which we have to examine is
whether the ratio of the judgment of the Division
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Bench in Raheja Development Corpn. [(2005) 5 SCC
162] as enunciated in para 20, is correct. If the
development agreement is not a works contract
could the Department rely upon the second contract,
which is the tripartite agreement and interpret it to
be a works contract, as defined under the 1957 Act.
The Department has relied upon only the judgment
of this Court in Raheja Development Corpn. case
[(2005) 5 SCC 162] because para 20 does assist the
Department. However, we are of the view that if the
ratio of Raheja Development case [(2005) 5 SCC
162] is to be accepted then there would be no
difference between a works contract and a contract
for sale of chattel as a chattel.
12. Lastly, could it be said that the petitioner
Company was the contractor for prospective flat
purchaser. Under the definition of the term "works
contract" as quoted above the contractor must have
undertaken the work of construction for and on
behalf of the contractor for cash, deferred (sic
payment) or any other valuable consideration.
According to the Department, the development
agreement is not a works contract but the tripartite
agreement is a works contract which, prima facie,
appears to be fallacious. There is no allegation that
the tripartite agreement is sham or bogus."
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22. The Larger Bench of the Hon'ble Apex Court in
LARSEN AND TOUBRO LIMITED AND ANOTHER VS. STATE
OF KARNATAKA8, considering various aspects of JDA, held
as follows:
"88. The question is: whether taxing sale of
goods in an agreement for sale of flat which is to be
constructed by the developer/promoter is permissible
under the Constitution? When the agreement
between the promoter/developer and the flat
purchaser is to construct a flat and eventually sell
the flat with the fraction of land, it is obvious that
such transaction involves the activity of construction
inasmuch as it is only when the flat is constructed
then it can be conveyed. We, therefore, think that
there is no reason why such activity of construction
is not covered by the term "works contract". After
all, the term "works contract" is nothing but a
contract in which one of the parties is obliged to
undertake or to execute works. Such activity of
construction has all the characteristics or elements of
works contract. The ultimate transaction between the
parties may be sale of flat but it cannot be said that
the characteristics of works contract are not involved
in that transaction. When the transaction involves
the activity of construction, the factors such as, the
8
(2014) 1 SCC 708
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flat purchaser has no control over the type and
standard of the material to be used in the
construction of the building or he does not get any
right to monitor or supervise the construction activity
or he has no say in the designing or layout of the
building, in our view, are not of much significance
and in any case these factors do not detract the
contract being works contract insofar as construction
part is concerned."
89. For sustaining the levy of tax on the
goods deemed to have been sold in execution of a
works contract, in our opinion, 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. In a building
contract or any contract to do construction, the
above three things are fully met. In a contract to
build a flat there will necessarily be a sale of goods
element. Works contracts also include building
contracts and therefore without any fear of
contradiction it can be stated that building contracts
are species of the works contract.
Xxxxxxx
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105. The argument on behalf of the
developers that the flat purchaser is entitled to
transfer of flat and conveyance of fraction of land
only when all instalments have been fully paid and
that shows that the agreement between the
developer and the flat purchaser is the sale of flat
and not to appoint the developer as the contractor of
the flat purchaser for the purposes of carrying out
the construction of the flat for and on behalf of the
flat purchaser has no merit. The submission
overlooks the typical nature of the development
agreement which is followed by a tripartite
agreement between the owner of the land, the
developer and the flat purchaser. Effectively and de
facto it is the developer who constructs the building
for the flat purchaser. The developer does so for
monetary consideration. The label of payment is not
decisive but the factum of the payment is. The
construction is done on payment of price as agreed
upon between the developer and the flat purchaser.
It is not necessary to recapitulate all clauses of the
agreement under KOFA or for that matter under
MOFA. Raheja Development [K. Raheja Development
Corpn. v. State of Karnataka, (2005) 5 SCC 162]
takes note of relevant clauses of the recitals and the
agreement under KOFA. We need not repeat them.
Similarly, Form V of the Maharashtra Ownership Flat
Rules contains recital such as, "as a result of the
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development agreement the promoters are entitled
and enjoined upon to construct buildings on the said
land". One of the relevant clauses (omitting the
unnecessary portion) in Form V reads:
"1. The promoter shall construct the said
building/s ... in accordance with the plans, designs,
specifications ... which have been seen and approved
by the flat purchaser with the owner [Ed.: An
alternative source states "purchaser with only such
variations and modifications...."] , such variations
and modifications as the promoter may consider
necessary or as may be required by the local
authority/the Government concerned ...
Provided that the promoter shall have to
obtain prior consent in writing to the flat purchaser
in respect of variations or modifications which may
adversely affect the flat of the purchaser."
It is, thus, not correct to say that the work is
undertaken by the developer for himself and for the
owner and the construction is not carried for and on
behalf of the purchaser."
106. In the development agreement
between the owner of the land and the developer,
direct monetary consideration may not be involved
but such agreement cannot be seen in isolation to
the terms contained therein and following
development agreement, the agreement in the
nature of the tripartite agreement between the
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owner of the land, the developer and the flat
purchaser whereunder the developer has undertaken
to construct for the flat purchaser for monetary
consideration. Seen thus, there is nothing wrong if
the transaction is treated as a composite contract
comprising of both a works contract and a transfer of
immovable property and levy sales tax on the value
of the material involved in execution of the works
contract. The observation in the referral order that if
the ratio in Raheja Development [K. Raheja
Development Corpn. v. State of Karnataka, (2005) 5
SCC 162] is to be accepted then there would be no
difference between works contract and a contract for
sale of chattel as chattel overlooks the legal position
which we have summarised above.
Xxxxxx
110. It may, however, be clarified that activity
of construction undertaken by the developer would
be works contract only from the stage the developer
enters into a contract with the flat purchaser. The
value addition made to the goods transferred after
the agreement is entered into with the flat purchaser
can only be made chargeable to tax by the State
Government."
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On a careful reading of the above decision, it can be
gathered that a development agreement between the land
owner and the developer may not necessarily involve direct
monetary consideration, unless it is a tripartite agreement
between the land owner, the developer and the flat
purchaser, wherein the developer undertakes construction
for the flat purchaser for monetary consideration, then the
transaction assumes the character of a composite contract
comprising both a works contract and a transfer of
immovable property. It is further held that, the activity of
construction undertaken by the developer would constitute
a works contract only from the stage at which the developer
enters into a contract with the flat purchaser. In the light of
the above decisions of the Hon'ble Apex Court, the
questions of law raised requires to be considered.
23. We do not find any error with the finding of the
Tribunal that the JDA between the land owner and the
developer is in the nature of barter wherein the land owner
transfers the agreed share of land, in consideration, the
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developer constructs apartments and delivers the agreed
portion to the land owner. We are in agreement with the
said finding and in terms of Section 2(29) of the KVAT Act,
such transaction would not amount to sale.
24. The Larger Bench of the Hon'ble Apex Court in
LARSEN AND TOUBRO LIMITED (supra) has held that
where a contract comprises both a works contract and a
transfer of immovable property, the same does not seize to
be a works contract. It is further held that construction
undertaken by a developer for a flat purchaser for monetary
consideration constitutes a works contract.
25. Insofar as a development agreement between
the land owner and the developer is concerned, though
direct monetary consideration may not be involved, such an
agreement cannot be moved in isolation. It has to be read
in conjunction with the subsequent agreements entered into
between the developer and the flat purchasers. In tripartite
agreements where the developer agrees for construction for
the flat purchaser for monetary consideration, the
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transaction assumes the character of a composite contract
comprising both a works contract and a transfer of
immovable property and levy of sales tax on the value of
materials involved in the execution of the works contract is
permissible. However, the activity of construction
undertaken by the developer would constitute a works
contract only from the stage at which the developer enters
into a contract with the flat purchaser. Then, only the value
addition to the goods transferred after entering to such
agreements with the flat purchasers can be subjected to tax
by the State.
26. Reliance placed by the learned Additional
Government Advocate on the decision of the Hon'ble Apex
Court in M/S. GANNON DUNKERLEY AND CO., AND OTHERS
VS. STATE OF RAJASTHAN AND OTHERS9 is misplaced in
view of the subsequent Larger Bench decision of the Hon'ble
Apex Court in LARSEN AND TOUBRO LIMITED (supra).
9
(1993) 1 SCC 364
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27. In the light of the above, even if the transaction
is treated as a composite contract comprising both a works
contract and a transfer of immovable property, the levy of
sales tax on the value of materials involved in the execution
of the works contract would be confined only to the
construction activity undertaken by the developer pursuant
to agreements entered into with the flat purchasers.
Therefore, the JDA between the land owner and the
developer is a composite contract comprising both works
contract and a transfer of immovable property, and that
sales tax may be levied on the value of materials involved
in the execution of the works contract, subject to the
decision of the Larger Bench of the Hon'ble Apex Court in
LARSEN AND TOUBRO LIMITED (supra) i.e., the activity of
construction undertaken by the developer would constitute
a works contract only from the stage at which the developer
enters into a contract with the flat purchaser. Therefore, the
construction undertaken in respect of a land owner's share
under the JDA would not amount to a works contract.
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28. Accordingly, question of law No.1 is answered in
favour of the assessee and against the Revenue.
Regarding Question of Law No.2:
29. Answer to question of law No.1 would almost
cover or answer the present question. In terms of the
Larger Bench decision of the Hon'ble Apex Court in LARSEN
AND TOUBRO LIMITED (supra), to sustain the levy of tax
on goods deemed to have been sold in the execution of a
works contract, the following conditions must be satisfied:
a) There must be a works contract;
b) Goods must have been involved in the execution
of such works contract; and
c) Property in those goods must be transferred to a
third party, either as goods or in some other
form.
30. As noticed from the Clauses of the JDA, the land
owner has agreed to convey a specific percentage of
undivided share in the land in favour of the developer or its
nominees and in consideration thereof, the developer has
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agreed to construct and deliver to the land owner a
corresponding proportion of the salable super built-up area.
The JDA would also indicate that the land owner has agreed
to convey 65% of the undivided share in the land and the
developer has agreed to construct and deliver 35% of the
salable built-up area. The entire cost of construction is to be
borne by the developer. There is no requirement of
payment of monetary consideration by the land owner to
the developer towards construction of land owner's share.
However, such agreement is considered as a composite
contract for construction and transfer of immovable
property, levy of tax is permissible only to the extent of
construction activity that too, from the stage at which the
developer enters into contract with the flat purchasers, that
too, in respect of value addition to the goods transferred
after such agreements with the flat purchasers.
31. In LARSEN AND TOUBRO VS. STATE OF
KARNATAKA10 and in STATE OF KARNATAKA VS. VASWANI
10
ILR 2010 KAR. 3154
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ESTATES PVT. LTD.,11 it has been held that the levy of sales
tax is confined to the value of goods involved in a particular
taxable activity. It is further held that, in execution of a
works contract, several components are involved, and
unless the value of the goods transferred in the course of
execution of the works contract is ascertained, and the levy
is confined to such value, the charging provision itself would
fail. This Court, referring to Article 366 (29A) of the
Constitution of India, has held that charge is restricted to
the property in goods involved in the execution of a works
contract and nothing beyond. In the absence of
consideration, the transaction would partake the character
of barter or exchange.
32. Insofar as the words "other valuable
consideration" appearing in the definition of 'sale' in terms
of Section 2(29) of the KVAT Act, the Allahabad High Court
considering the same expression has held that where no
price is paid, the transaction is one of exchange or barter.
11
2014 SCC OnLine KAR 12387
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Applying the Rule of ejusdem generis, it is held that "other
valuable consideration" would take color from monetary
modes such as payment by cheque, bills of exchange or
similar negotiable instruments. The Hon'ble Apex Court in
DHAMPUR SUGAR MILLS LIMITED., VS. COMMISSIONER
OF TRADE TAX, U.P.12 had an occasion to consider the word
'sale' while dealing with Clause 29A of Article 366 of the
Constitution of India and the observation made at
paragraph 20 reads as follows:
"20. It is inconceivable in law that a licence
fee can be a subject-matter of barter or exchange.
A barter or exchange indisputably is distinct and
different from a sale. A contract of sale denotes a
transfer of property in goods by mutual consent.
Such a transfer of ownership must be in relation to
transfer from one person to another. The
consideration would be a price in the form of
money. Only when the consideration for transfer
consists of other goods, it may be an exchange or
barter. Such is not the position here."
The above makes it abundantly clear that, barter or
exchange is distinct from a sale. The essential ingredients
12
(2006) 5 SCC 624
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of sale is the presence of price in the form of money. In the
absence of consideration in the form of money or price, the
transaction would partake the character of an exchange or
barter.
33. In the instant case, to constitute sale in terms of
Sub-Section (29) of Section 2 of KVAT Act, though there is
transfer of property there is no consideration. Even under
expression 'other valuable consideration', price in the form
of money or monetary value shall exist to constitute a sale.
Therefore, the contention of the State that the cost of
construction of land owner's share constitutes consideration
for the transfer of undivided share in the land cannot
be accepted, in the absence of any statutory backing solely
on the basis of the Circular No.12/2009-10 dated
07.12.2009.
34. Accordingly, the question of law No.2 is
answered in favour of the assessee and against the
Revenue.
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Regarding Question of Law No.3:
35. The larger Bench of the Hon'ble Supreme Court
in LARSEN & TOUBRO LIMITED (supra) has held that
the State Legislature lacks the legislative competence under
Entry 54 of List II of the Seventh Schedule to levy tax on
the transfer of immovable property. However, it has also
been held that the State is competent to levy sales tax on
the sale of goods component in an agreement for sale of
flats, which includes a deemed sale of goods in the
execution of a works contract. It is further held that there is
no infirmity in treating the transaction comprising a
development agreement between the landowner and the
developer, followed by agreements with flat purchasers, as
a composite contract involving both a works contract and a
transfer of immovable property, and in levying sales tax on
the value of materials involved in the execution of the
works contract. While considering Article 366(29A)(b) of the
Constitution, it is held that taxation of the sale of goods
element in a works contract is permissible even after
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incorporation of goods, provided that the levy is confined to
the value of the goods and does not extend to the transfer
of immovable property. Ultimately, it is concluded that the
activity of construction undertaken by the developer would
constitute a works contract only from the stage at which the
developer enters into a contract with the flat purchaser, and
only the value addition to the goods transferred after such
stage can be subjected to tax by the State.
36. In the light of the findings recorded herein, since
the subject matter of the Joint Development Agreement is
the transfer of immovable property, any levy of tax thereon
would fall outside the legislative competence of the State.
37. Accordingly, the question of law No.3 is
answered in favour of the Assessee and against the
Revenue.
Regarding Question of Law No.4:
38. This issue arises in the light of Circular
No.121/2009-10 dated 07.12.2009, which mandates the
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Assessing Authority, in cases involving Joint Development
Agreements (JDA) to include the value of land relatable to
the developer's share in the taxable turnover, on the
premises that towards the cost of construction of the land
owner's share of the built-up area the developer receives
from the flat purchasers the value attributable to the
undivided share of land. It further prescribes three different
methods to ascertain the value of such undivided share
recovered by the developer. Likewise, for determining the
amount payable by the land owner towards construction of
his share, the Circular again provides three methods to
ascertain the value attributable to the transfer of undivided
share in the land. The value so determined is directed to be
treated as the total consideration for the works contract
executed by the developer and added to the turnover
declared by the developer.
39. The respondent-assessee contends that the
statute would not prescribe or contain computation
mechanism and circular cannot prescribe such computation
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mechanism. On going through the circular dated
07.12.2009, it would not indicate the provision under which
the said circular is issued or source of power to issue such
circular. No enabling provision to issue such circular is
pointed out. It is true that to supplement a provision,
circulars could be issued. However, in the absence of any
provision enabling the authority to prescribe such
computation mechanism, the circular would not stand to
legal scrutiny. It is settled position of law that, once a
charging provision is provided under the statute the
machinery for its computation, shall also be provided. No
such mechanism is provided under the statute. The instant
circular without statutory authority cannot be enforced. The
Hon'ble Apex Court in the case of GOVIND SARAN GANGA
SARAN VS. COMMISSIONER OF SALES TAX AND OTHERS13,
at paragraph 6 has observed as follows:
"6. The components which enter into the
concept of a tax are well known. The first is the
character of the imposition known by its nature
which prescribes the taxable event attracting the
13
1985 (Supp) SCC 205
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levy, the second is a clear indication of the person on
whom the levy is imposed and who is obliged to pay
the tax, the third is the rate at which the tax is
imposed, and the fourth is the measure or value to
which the rate will be applied for computing the tax
liability. If those components are not clearly and
definitely ascertainable, it is difficult to say that the
levy exists in point of law. Any uncertainty or
vagueness in the legislative scheme defining any of
those components of the levy will be fatal to its
validity."
40. In COMMISSIONER OF CENTRAL EXCISE AND
CUSTOMS, KERALA VS. LARSEN & TOUBRO LTD.,14 the
Hon'ble Apex Court has held that where there is no
machinery provision for assessment, rendering the law
vague, it would not be open to the Assessing Authority to
arbitrarily impose or assess tax. In the absence of
machinery and procedure to be followed for assessment,
such machinery provisions cannot be introduced by way of
circulars, unless the Act enables such prescription.
14
(2016) 1 SCC 170
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41. The Punjab & Haryana High Court in DHINGRA
JARDINE INFRASTRUCTURE (P.) LTD. V. STATE OF
HARYANA (supra) has emphasised the necessity of a
proper statutory mechanism for levy and computation of
tax. The Court considered and answered the following
question:
"(7) Whether levy of tax on builders can be
sustained in the absence of machinery provisions?
The period being up to 16.05.2020 and thereafter,
when the Rules were framed."
After analysing the various statutory provisions and the
judgments of the High Courts and the Hon'ble Supreme
Court, the aforesaid question was answered by holding that,
in the absence of a machinery provision specifying the
details for computation, though the levy per se may not be
in dispute, it would nevertheless be unenforceable. It was
further held that unless the statute or rules provide for the
manner of calculation of taxable turnover, the levy cannot
be enforced.
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42. It is settled position of law that a circular or
executive order cannot supplement what the statute or act
would prescribe or contemplate. If levy of tax is permitted
under executive order or circular, it would defeat the
process of legislation. Therefore, the instant circular is
opposed to the decision of the Hon'ble Apex Court in
COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS,
KERALA (supra). Accordingly, the question of law No.4 is
answered in favour of the assessee and against the
Revenue.
Regarding question of Law No.5:
43. The learned Additional Government Advocate
contends that the respondent, having opted for the
composition scheme, is entitled to deductions from the total
turnover only to the extent provided under Section 15 of
the Act. It is submitted that, under the composition
scheme, tax is levied at a specified rate on the total
turnover or on the total consideration for the works contract
executed. However, in the light of the judgment of the
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Larger Bench of the Hon'ble Supreme Court in LARSEN &
TOUBRO LIMITED (supra), tax cannot be levied on the
transfer of immovable property. It has been clarified that a
works contract arises only from the stage at which the
developer enters into a contract with the flat purchaser, and
the levy is confined to the value addition to the goods
transferred thereafter. Once it is held that the value of land
is not liable to be included in the taxable turnover, the
question of granting or denying deductions from the total
turnover, in the context of the composition scheme, would
not arise. This question of law is answered accordingly.
44. In STA Nos.8, 9 and 10 of 2022, it is submitted
that the land is owned by the developer. In the light of the
submissions made by learned Additional Government
Advocate for the State and the finding recorded while
answering the questions framed, the answer to the above
questions would govern the above appeals. No further
finding or adjudication is necessary.
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Re. Review Petitions
45. In light of the findings recorded while answering
the questions of law framed hereinabove, we find no error
apparent on the face of the record warranting interference
in these Review Petitions.
Conclusion
46. In view of the foregoing discussion, the following
conclusions emerge:
(i) The Joint Development Agreement (JDA) between
the landowner and the developer is a composite
arrangement involving both elements of transfer of
immovable property and works contract. However,
the construction activity would constitute a works
contract only from the stage at which the developer
enters into agreements with the flat purchasers.
(ii) The construction undertaken by the developer in
respect of the landowner's share under the JDA does
not amount to a works contract, as there is no
monetary consideration and the transaction is in the
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nature of barter or exchange, falling outside the
scope of "sale" under Section 2(29) of the KVAT Act.
(iii) The levy of tax under the KVAT Act is confined to the
value of goods involved in the execution of a works
contract. Such levy can be sustained only in respect
of the value addition to goods transferred pursuant
to agreements entered into with flat purchasers, and
not on the transfer of immovable property.
(iv) The Circular No.12/2009-10 dated 07.12.2009, in so
far as it seeks to introduce a mechanism for
valuation and to include the value of land in the
taxable turnover, lacks statutory backing and cannot
override or supplement the provisions of the Act.
Consequently, it is not binding on the assessees.
(v) In the absence of a statutory mechanism to
determine the value of goods involved in the
execution of works contract in the context of JDA,
the levy, to that extent, is unenforceable.
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(vi) The contention of the Revenue that the cost of
construction of the landowner's share constitutes
consideration for transfer of land is untenable in law.
(vii) Even under the composition scheme, tax cannot be
levied on elements attributable to transfer of
immovable property, and once the value of land is
excluded, the question of deduction from total
turnover does not arise.
ORDER
i) The Sales Tax Revision Petition Nos.181/2018, 182/2018, 25/2019, 49/2019, 71/2019, 72/2019, 73/2019, 74/2019, 75/2019, 76/2019, 77/2019, 1/2020, 4/2020, 5/2020, 6/2020, 18/2020 and 2/2022 filed by the Revenue are dismissed.
ii) The Sales Tax Appeal Nos.133/2012, 8/2022, 9/2022, 10/2022, 13/2022, 14/2022, 15/2022, 16/2022 and 17/2022 filed by the
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AND 26 OTHERS assessee/developer are allowed setting aside the impugned order.
iii) The Review Petition Nos.403/2025 c/w 404/2025 and 405/2025 are dismissed.
iv) Questions of law are answered in favour of the Assessee and against the Revenue.
v) No order as to costs.
Sd/-
(S.G.PANDIT) JUDGE Sd/-
(K. V. ARAVIND) JUDGE MV/NC