Court quashes VAT order on works contract, citing lack of reasoning. Remanded for reconsideration.

The Court quashed the order applying M.P. VAT Act, 2002 on the works contract due to lack of proper reasoning and failure to consider legal principles established in a relevant case. The matter was remanded back to the Assessing Officer for reconsideration, emphasizing the importance of addressing the legal question regarding the imposition of liability from the date of agreement. The Court dismissed the State's objection and directed the petitioner to appear before the Assessing Officer for further proceedings in accordance with the law.

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Issues:
Challenge to order applying M.P. VAT Act, 2002 on works contract without proper reasoning.

Analysis:
The petitioner challenged the order Annexure P/4 dated 5.2.2014 passed by the Additional Commissioner, Commercial Tax, which held that the provisions of M.P. VAT Act, 2002 would be applicable on the works contract executed by the petitioner. The petitioner's counsel pointed out that the order lacked reasoning for imposing the tax liability on the petitioner. Referring to the case of Larsen & Toubro Ltd. Vs. State of Karnataka, it was argued that liability arises only from the stage the developer enters into a contract with the flat purchaser. The Supreme Court held that the value addition made to the goods transferred after the agreement with the flat purchaser can be chargeable to tax by the State Government. The Court found the order to be non-speaking and passed without considering the legal principle established in the Larsen & Toubro case. Therefore, the Court quashed the order and remanded the matter back to the competent authority for reconsideration.

The State raised a preliminary objection based on previous judgments of the Court where similar matters were not entertained under Article 226 of the Constitution and the assessee was directed to file an appeal. However, the petitioner argued that the present case challenges the order applying the VAT Act, 2002 without considering the principles from the Larsen & Toubro case. The Court agreed with the petitioner's argument and emphasized that the legal question regarding the imposition of liability from the date of agreement is crucial and needs to be considered. The Court noted that similar non-speaking orders had been quashed in previous cases. Consequently, the Court allowed the petition, quashed the impugned order, and remanded the matter back to the Assessing Officer for reconsideration.

In conclusion, the Court disposed of the petition by quashing the order Annexure P/4 and remanding the matter to the Assessing Officer for reconsideration. The petitioner was directed to appear before the Assessing Officer on a specified date, and the Assessing Officer was instructed to proceed in accordance with the law.

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