Applicability of value added tax

[Guest]

Whether a partnership firm engaged in the business of developing building on its own land or joint venture with any land lord and later selling out to customer for both residential or commertial purpose are subjected to VAT as per West Bengal VAT.Seeking unambiguous opinion whether VAT applicable or not at present

[Surender Gupta]

There are certain decisions of Supreme Court and Allahabad High Court on the issue of Works Contract related to query raised by you. (2006 TMI - 493 and 2007-TMI-1440). Once the case is decided in accordance with the above decisions, I think the issue related to VAT would become easy.

AI Summary

Value added tax applicability depends on works contract classification for developers selling constructed residential or commercial units. Applicability of Value Added Tax to a partnership firm or joint venture constructing buildings on its own land and later selling residential or commercial units is conditioned on whether those construction activities are characterized as works contracts; cited judicial decisions addressing the works contract classification are presented as determinative for the VAT consequence, leaving VAT liability contingent on the outcome of that characterization.