Completed flat transfer not a works contract where construction agreement was executed after completion of the building.

A completed flat transferred through a sale of undivided share in land and a construction agreement executed after completion did not constitute a works contract under the Tamil Nadu Value Added Tax Act, 2006. The Court treated the transaction as a sale of a finished property with incidental documentation, noting that no construction remained to be undertaken when the agreement was executed and that the completion certificate was obtained only thereafter. VAT could not be fastened under Sections 5 and 6 on that basis, and stamp duty treatment was held irrelevant to VAT liability. The demand was therefore unsustainable.

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Issues: Whether the petitioner was liable to pay works contract tax under the Tamil Nadu Value Added Tax Act, 2006 on the basis of a tripartite construction agreement executed after the building had already been substantially completed.

Analysis: The transaction was found to be a sale of a fully constructed flat with an incidental truncation of the documentation into a transfer of undivided share in land and a construction agreement. The completion certificate had been obtained only after the agreement, which showed that no construction remained to be undertaken by the petitioner at the time of execution. On that basis, the transaction did not answer the description of a works contract so as to attract tax under Sections 5 and 6 of the Tamil Nadu Value Added Tax Act, 2006. The Court also noted that the stamp duty treatment adopted for the agreement was not the basis for fastening VAT liability on the petitioner, and that any further inquiry, if required, would lie in the domain of the stamp authorities.

Conclusion: The petitioner was not liable to works contract tax under the Tamil Nadu Value Added Tax Act, 2006, and the demand raised against her was unsustainable.

Final Conclusion: The impugned VAT demand was set aside, with liberty reserved to proceed in accordance with law against the appropriate parties, if so warranted.

Ratio Decidendi: A transaction involving transfer of a completed flat cannot be treated as a works contract merely because it is documented through a sale of undivided share in land coupled with a construction agreement executed after completion of the building.

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