Court assesses challenge to Haryana VAT Rules on flat expenses & sale price elements

The court addressed petitions challenging the validity of Rule 25(2) and 25(7) of the Haryana Value Added Tax Rules, 2003, regarding tax on expenses and total sale price elements of flats/units. Petitioners argued the rules violated the Constitution and sought to quash assessment notices under the new rules. The court directed petitioners to provide records and representations for assessment, ensuring a fair process. The vires issue was left open for challenge post-assessment decision.

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Issues:
Challenge to the validity of Rule 25(2) and 25(7) of the Haryana Value Added Tax Rules, 2003 and related provisions charging tax on expenses and elements of total sale price of flat/unit, violation of Constitution of India, ultra vires nature of the rules, and issuance of notices for assessment under new rules.

Analysis:
The judgment addresses a bunch of petitions challenging the validity of Rule 25(2) and 25(7) of the Haryana Value Added Tax Rules, 2003. The petitioner sought a writ declaring these rules ultra vires the Constitution of India as they charge tax on expenses and elements of total sale price of flat/unit without a relationship with the value of goods transferred in works contracts. The petitioner argued that the rules violate Article 246 of the Constitution of India, Schedule VII, List II, Entry 54, and Article 366(29A). The State's affidavit was also brought into question, alleging non-compliance with its commitments. Additionally, the petitioners contended that the rules were indeterminable and sought a writ of certiorari to quash the assessment notices issued under the new rules.

The judgment provides background information stating that the petitioner is a developer involved in the sale of apartments/flats/units. Following directions from a previous case, the Government of Haryana introduced new rules for tax computation, effective from a specified date. Subsequently, the petitioner received an assessment notice under the new Rule 25 for the years 2012-13 and 2013-14. The petitioner argued that the new rules exceeded the State's authority under Entry 54 List II and contravened previous court decisions. The petitioners contended that the authorities were obligated to adhere to the new rules, which were deemed unconstitutional.

The court heard arguments from the petitioners' counsel challenging the assessment notice requiring submission of accounting records. The judgment concludes by directing the petitioners to provide relevant records and submit comprehensive representations for assessment. The assessing authority is instructed to make a decision in accordance with the law, ensuring a fair hearing for each petitioner. The court clarified that the issue of vires was not being determined at that stage, allowing petitioners to challenge the rules' validity after the assessing authority's decision, if necessary, following the proper legal procedures.

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