Transferable development rights as valuable consideration make slum rehabilitation works contracts taxable under MVAT.

Transferable development rights and development rights certificates received under slum rehabilitation agreements were treated as other valuable consideration because they were transferable, had an ascertainable market value, and could be converted into money. On that basis, the Maharashtra Value Added Tax Act, 2002 was held wide enough to treat the arrangement as a taxable works contract sale involving transfer of property in goods during execution of the work. The machinery provisions could be used to compute tax on the value of the consideration received, and the tax determination was sustained against the assessee.

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Issues: Whether the transfer of land and construction of rehabilitation tenements under the slum rehabilitation agreements, coupled with receipt of transferable development rights and development rights certificates, constituted a taxable works contract sale under section 2(24) of the Maharashtra Value Added Tax Act, 2002, and whether such TDR/DRC amounted to other valuable consideration.

Analysis: The agreements showed that the developer undertook construction of tenements for the Slum Rehabilitation Authority free of cost and, in return, received TDR/DRC which could be transferred and sold in the open market for a monetary price. The statutory scheme under section 2(24) of the Maharashtra Value Added Tax Act, 2002, read with the Explanation and the works contract machinery, was held wide enough to include a transfer of property in goods involved in execution of such works contract. Even assuming that the phrase "other valuable consideration" must be read ejusdem generis with cash or deferred payment, the consideration here was still monetary in substance because the TDR/DRC had an ascertainable market value and was capable of being converted into money. The court also noted that the machinery provisions could be applied to determine tax on the basis of the value of the consideration received.

Conclusion: The receipt of TDR/DRC constituted other valuable consideration in monetary terms, and the transaction was taxable as a works contract sale under the MVAT Act.

Final Conclusion: The writ petition and appeal failed, the Tribunal's tax determination was sustained, and the substantial questions of law were answered against the assessee.

Ratio Decidendi: Where development rights or certificates received under a works contract are transferable, command a market price, and are convertible into money, they constitute other valuable consideration for the purposes of levy of VAT on the transfer of property in goods involved in execution of the works contract.

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