Works contract VAT applies only to goods transferred, excluding immovable property value; contrary assessment orders were set aside.

VAT in a works contract is confined to the value of goods transferred in execution of the contract, and amounts attributable to immovable property and other pre-agreement elements are excluded from the taxable base. Applying the earlier Division Bench interpretation of the Haryana VAT regime, the writ petition was disposed of as covered by that ruling, Rule 25(2) was upheld only to the extent it was read down consistently with that principle, and assessment and revisional orders based on the contrary approach were set aside. Notices already issued could proceed only in accordance with the declared interpretation, leaving fresh action open where legally permissible.

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Issues: Whether the challenge to the Haryana Value Added Tax provisions relating to inclusion of land value in the taxable base for developers was covered by the earlier Division Bench decision, and what consequential relief followed.

Analysis: The writ petition was treated as covered by the earlier Division Bench ruling, which held that VAT could not be levied on amounts beyond the value of goods transferred in the execution of a works contract. The provisions were construed so that value attributable to immovable property and other pre-agreement items stood excluded from the agreement value, and Rule 25(2) was upheld only to the extent it was read down consistently with that interpretation. On that basis, assessment and revisional orders founded on the contrary approach were liable to be set aside, while notices already issued could proceed in accordance with law and the stated interpretation.

Conclusion: The challenge was disposed of in line with the earlier ruling, resulting in setting aside of the impugned assessment and revisional orders and leaving the matter open for fresh action consistent with the legal principles declared.

Final Conclusion: The writ petition was disposed of by applying the earlier Division Bench interpretation of the Haryana VAT regime, with consequential relief against the impugned orders and liberty for the competent authority to proceed afresh where applicable.

Ratio Decidendi: In a works contract, VAT can be levied only on the value of goods transferred in execution of the contract, excluding the value of immovable property and other pre-agreement elements, and any rule or assessment contrary to that principle must be read down or set aside.

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