AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (11) TMI 648
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....and supplementary counter-affidavit, filed by the parties. The brief facts of the case, as narrated in the writ petition are that the petitioner is a partnership firm created under a registered partnership deed dated September 7, 2006 between M/s. Assotech Contracts (India) Ltd. and M/s. Supertech Construction Pvt. Ltd. (Both incorporated under the Companies Act, 1956). The petitioner-firm was constituted for the purposes of undertaking residential houses construction projects (copy of partnership deed is annexed as annexure 1 to the writ petition). The firm was registered under the Uttaranchal Value Added Tax Act, 2005 (for short hereinafter referred as, "the VAT Act, 2005"). A copy of the registration certificate is annexed as annexure 2 to the writ petition. In pursuance to the joint venture of the firm, the petitioner applied for allotment of land in the State of Uttarakhand through State Industrial Development Corporation of Uttarakhand Ltd. (for short hereinafter referred as SIDCUL). SIDCUL pleased to grant letter of award on May 30, 2006 and June 8, 2006 allotting 50 acres of land in Pantnagar, a copy of allotment letter containing terms and conditions of allotment is annex....
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....uits, Bajaj Auto Limited, etc. On December 28, 2006, the petitioner under mistaken belief both on fact and law, applied for compounding under the compounding scheme dated August 8, 2006. However, later the petitioner sought to withdraw the compounding application, but the same was rejected. It is alleged by the petitioner that he was compelled to move the application for compounding. Referring to judgment and order dated March 23, 2007, passed by the Allahabad High Court in Assotech Realty Private Limited v. State of Uttar Pradesh [2007] 8 VST 738 (Writ Petition No. 997 of 2006), it is pleaded that since the petitioner is the owner of the land, as such tax cannot be collected from him. Hence the order dated April 17, 2007 (copy annexure 10 to the writ petition), issued by the Deputy Commissioner, Commercial Tax, Rudrapur, asking the petitioner to give the details of sale/purchase of the flats for the purposes of collection of compounding fee and order dated March 16, 2007 (copy annexure 11 to the writ petition), whereby the said authority has passed order under section 35(1) of the VAT Act, 2005, directing that the petitioner would be liable to pay one per cent of trade tax under t....
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..... A supplementary affidavit has been filed on behalf of the petitioner with which a copy of lease deed is annexed as annexure SA 5. This court has to examine whether the construction work undertaken by the petitioner is "works contract" or not and whether the petitioner is liable to pay the trade tax under VAT Act, 2005, or not. Before further discussions, it is pertinent to mention here certain conditions of the lease deed executed by SIDCUL in favour of the petitioner in respect of land on which the constructions in question are being raised. The relevant portions of the lease deed showing the nature are being reproduced below: ". . . The State of Uttarakhand has given management rights in the land measuring 172171.521 square meters (42.543 acres) situated at IIE Pantnagar, Rudrapur, District Udham Singh Nagar, Uttarakhand in village Jagat Pur Khasra Nos. 61, 62 and in village Bhura Rani Khasra No. 75, 83/1/2, 84/1/2, 85/1/2, 94/1/1 of Tehsil Kichha as per the site plan annexed hereto, to the lessor, vide G.O. No. 363/XIII-II/ 373(2)/2003, issued on May 23, 2007 and another amended G.O. No. 539/373(2)/XIII-II/2003, issued on July 19, 2007 for the purpose of setting up an integr....
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....aid Rs. 34,87,334 (rupees thirty-four lacs eighty-seven thousand three-hundred and thirty-four only) being 0.5 per cent of the total land premium as one time lease rent before the execution of lease deed (the receipt whereof the lessor both hereby acknowledge). (b) Yielding and paying therefor yearly in advance during the said term up to the lessor in the month of January for each year. The yearly lease rent is indicated below: In case of non-allotment, the lessee shall pay lease rent at Rs. 15 per square meter (super area)/year. In case of allotment, the respective flat owners will pay the lease rent at Rs. 15 per square meter (super area)/year. In case of default in payment of advance lease rent, the interest at 18 per cent per annum compounded at every half year on the overdue amount shall also be payable. (c) The flat owners/lessee shall be liable to pay all rates, taxes charges and assessment leviable by whatever name called for every description in respect of the plot of land or building constructed thereon assessed or imposed from time to time. (d) The lessee shall use the allotted plot for construction of group housing flats. However the allottee/lessee shall be entitle....
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..... Further the sub-lessee shall also be entitled to mortgage the flats to such financial institutions. The lessor shall have no objection whatsoever in mortgaging of the flat by sub-lessee in favour of such lending institutions, subject to the lessor's rights to full and final payment of lease amount. (g) A preliminary lay out plan shall be submitted by lessee showing the area/location of each allottee and details of roads/parks and other facilities to be provided with in the plot. In case the proposed layout plan required any modifications as per the building by laws at any time the same shall be modified as per building by laws of lessor at the cost and expenditure of the lessee and the same shall be binding upon the lessee. (h) The lessee shall keep minimum 30 per cent of the allotted area open for laying internal development work comprising of site clearance and leveling, construction of roads, footpaths, drains, culverts, streets electrification and lighting, water supplier, sewerage and scavenging road site plantation, horticultural, developments of parks, adequate provision of parking space and any other items as may be desired by the lessor or which are necessary or i....
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....75 or any other Act/law as are applicable in State or Uttarakhand shall be applicable on lessee/sub-lessees. (m) The dwelling unit/construction on the plot shall be used for residential purpose only. No other activity shall be permitted in the dwelling unit, except building construction for community requirement and essential utilities. . . . (u) The lessee shall be required to complete the construction on the plot within thirty six months from the date of execution of the lease deed as per approved PERT chart, layout plan and get building completion certificate, i.e. (i) At least 40 per cent of all the dwelling units to be sold as built-up units (to encourage early habitation of the end users). At least 50 per cent of these 40 per cent to be offered for possession within one year. (ii) The lessee shall be required to complete the construction of group housing flats on the allotted plot as per their approved layout plan and also as per the approved PERT chart and get the part building completion certificate as per sub-clause (i) above issued within one year from the date of start of construction as described in the approved PERT chart. (iii) All services, e.g., water su....
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....ing(s) to allottees, and terms and conditions for use/ maintenance of built up spaces for community facility. 17.. The tripartite sub-lease deed for the flat owner shall be executed by SIDCUL on the specific recommendation from you, provided all formalities are complete. " The above-mentioned conditions clearly show that the petitioner has in fact undertaken a work for constructing the residential flats in an industrial area of Uttarakhand, as agreed between it and SIDCUL. As such, it cannot be said that the petitioner is constructing flats on the land purchased by it. As to the judgment dated March 23, 2007 passed by the Allahabad High Court in Writ Petition No. 997 of 2006 (Assotech Realty Private Limited v. State of Uttar Pradesh [2007] 8 VST 738), on behalf of the respondents, attention has been drawn of this court to annexure SCA 1 to the supplementary counter-affidavit, which is a copy of the order passed in appeal (arising out of CC. Nos. 11480-11481 of 2007) filed by the State of Uttar Pradesh against said order of the Allahabad High Court. The apex court vide order dated December 3, 2007, has set aside the judgment of the Allahabad High Court with the following order: "....
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....r unit is not resold but retained by the appellants, there would be no works contract to that extent. But so long as there is no termination the construction is for and on behalf of the purchaser. Therefore, it remains a works contract within the meaning of the term as defined under the said Act. It must be clarified that if the agreement is entered into after the flat or unit is already constructed, then there would be no works contract. But so long as the agreement is entered into before the construction is complete it would be a works contract." The above observations of the apex court clearly show that the nature of work like the one undertaken by the petitioner in the present case is nothing but works contract and he is under agreement with SIDCUL to do said work. Apart from this, what is important in this case is that the petitioner himself by filing an application for compounding under the compounding scheme under section 7(2) of the VAT Act, 2005, has admitted that the nature of his work is "works contract" as is apparent from annexure CA 1 to the counter-affidavit filed on behalf of the respondents. The said fact also gets corroborated from annexure 7 to the writ petitio....