Land value exclusion, limits on suo motu revision, and finality under settlement schemes in works-contract taxation.

In a works-contract composition regime, land value forming part of an immovable property transaction cannot be included in taxable turnover because tax is confined to the transfer of goods in a works contract. Suo motu revision is valid only where the reassessment order is both erroneous and prejudicial to the Revenue; a mere change of opinion on the same material does not satisfy that jurisdictional test. Proceedings that have attained finality under the Karasamadhana Scheme cannot be reopened in revision after settlement, as the statutory closure cannot be unsettled by later revisional action.

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Issues: (i) Whether land cost forming part of an immovable property transaction could be included in the taxable turnover under the composition scheme for works contracts; (ii) whether the revisional authority could invoke suo motu revision absent satisfaction of the twin requirements that the reassessment order be erroneous and prejudicial to the interest of the Revenue; (iii) whether proceedings which had attained finality under the Karasamadhana Scheme could be reopened in revision.

Issue (i): Whether land cost forming part of an immovable property transaction could be included in the taxable turnover under the composition scheme for works contracts.

Analysis: Tax under the constitutional scheme and the VAT enactment is confined to sale of goods or transfer of property in goods in a works contract. Immovable property does not fall within that taxable field, and the value attributable to land cannot be roped in directly or indirectly. The assessment authority had already excluded land value while computing turnover, and the circular relied upon also supported exclusion of amounts received towards undivided share in land where the project was on own land.

Conclusion: The inclusion of land cost in the taxable base was impermissible and the assessees contention on this issue was accepted.

Issue (ii): Whether the revisional authority could invoke suo motu revision absent satisfaction of the twin requirements that the reassessment order be erroneous and prejudicial to the interest of the Revenue.

Analysis: Suo motu revision is sustainable only when both jurisdictional facts are established. On the material considered in reassessment, the prescribed authority had examined the vouchers, ledgers and documents, accepted the turnover, and dealt with the disputed deductions and claims. The revisional order merely substituted a different view on the same material, which amounted to a change of opinion and did not show that the reassessment order was either erroneous in law or prejudicial to the Revenue.

Conclusion: The invocation of suo motu revisional jurisdiction was unsustainable and failed on jurisdictional grounds.

Issue (iii): Whether proceedings which had attained finality under the Karasamadhana Scheme could be reopened in revision.

Analysis: Once the tax arrears were regularised and the benefit of the settlement scheme was availed, the matter stood concluded to the extent contemplated by the scheme. A fresh revisional exercise could not be used to unsettle that closure by relying on a clarification that could not override the statutory scheme.

Conclusion: The concluded assessment period could not be reopened by revision after settlement under the scheme.

Final Conclusion: The impugned revisional orders were unsustainable and were set aside, with the assessee succeeding on all substantial questions of law.

Ratio Decidendi: Under a works-contract composition regime, land value is outside the taxable turnover, and suo motu revision can be exercised only when the lower order is both erroneous and prejudicial to the Revenue; a subsequent revision cannot unsettle a matter that has attained finality under a statutory settlement scheme.

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