TaxTMI 
TaxTMI 
2005 (5) TMI 7
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....hey enter into Agreements of Sale with intended purchasers. The Agreements would provide that on completion of the construction the residential apartments or the commercial complex would be handed over to the purchasers who would get an undivided interest in the land also. The owners of the land would then transfer the ownership directly to the society which is being formed under the Karnataka Ownership Flats (Regulation of Promotion of Construction, Sales, Management and Transfer) Act, 1974. The question which arises for consideration is whether the Appellants are dealers and are liable to pay turnover tax under the Karnataka Sales Tax Act. The Appellants filed returns showing Nil liability to pay tax on the footing that there was no transfer of any property in goods either by itself or by virtue of any works contract. The Adjudicating Authority did not accept their contention and passed an Assessment Order claiming tax. Against the Assessment Order, the Appellants went in Appeal to the Additional Joint Commissioner of Commercial Taxes (Appeal). The Additional Joint Commissioner held that tax was payable as there was transfer of property in goods pursuant to a works contr....
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....orks contract would be a dealer. Section 2(1)(u1) defines the words "taxable turnover" as under : "2(1)(u1) "taxable turnover" means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed, but shall not include the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India." Section 2(1)(v-i) is relevant. It defines a "works contract" as follows : "2(1)(v-i) "works contract" includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any moveable or immovable property." It is thus to be seen that under the Karnataka Sales Tax Act the definition of the words "works contract" is very wide. It is not restricted to a "works contract" as commonly understood, i.e., a contract to do some work on behalf of somebody else. ....
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....f this Court in the cases of C.I.T. vs. Podar Cement Ltd. reported in (1992) 5 SCC 482 and Mysore Minerals Ltd. vs. C.I.T. reported in (1999) 7 SCC 106. In these cases, in the context of the Income Tax Act, it has been held that even though there is no formal conveyance the concerned party could be considered to be the beneficial owner. Mr. Mehta submitted that an owner cannot be said to carrying on a works contract on behalf of others. Mr. Mehta next submitted that in any event the Appellants did not undertake any works contract for and on behalf of the intended purchasers. He submitted that the Appellants were themselves developing the property and selling flats or commercial complexes in that property. He submitted that in such type of activities no works contract was involved. Mr. Mehta submitted that in the Agreements with the intended purchasers there was a clause which provides that if all payments are not made then amounts paid can be forfeited and the agreement rescinded. He submitted that a person carrying out a works contract would have no right to forfeit or rescind the contract itself. He submitted that such a clause indicates that the Agreements are not agreements ....
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....esidential flats or commercial units. Thus, a works contract, within the meaning of the term in the said Act, can also be for construction of commercial units. For the purposes of considering whether an agreement amounts to a works contract or not, the provisions of the Karnataka Ownership Flats (Regulation of Promotion of Construction, Sales, Management and Transfer) Act, 1974 will have no relevance. However as Mr. Mehta has argued on this aspect we record that reliance of the Judgments in Podar Cement Ltd. and Mysore Minerals Ltd. cases (supra) are of no assistance to the Appellants. Those are cases under the Income Tax Act. Those cases lay down that the term 'owner' must be given an interpretation in the context of the provisions of the Act. If that rational was to be applied then in the context of the Karnataka Sales Tax Act, the Appellants would not be owners as admittedly they do not have any registered sale-deeds in their hand. The Agreement relied upon by Mr. Mehta between the Appellants and the owners of the land is nothing but a development Agreement. Pursuant to such an Agreement, plan would be get sanctioned in the name of the owner of the property. It would be th....
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....spective Purchaser an undivided 0.42% share, right, title and interest in the said land described in the First Schedule hereunder written (with no right to the Prospective Purchaser to claim any separate sub-division and/or right to exclusive possession of any portion of the said land) for a lump sum agreed and quantified consideration of Rs. 3,25,000/- (Rupees three lacs twenty five thousand only) to be paid by the Prospective Purchaser to the Holders at the time and in the manner stated in Clause 2 hereof; (b) K. Raheja Development Corporation, (as Developers) agree to build the said building named 'Raheja Towers', having the specifications and amenities therein set out in the Second Schedule hereunder written and as Developers for the prospective Purchaser, the Developers shall build for and as unit/s to belong to the Prospective Purchaser, the said premises (details whereof are set out in the Third Schedule hereunder written) for a lump sum agreed and quantified consideration of Rs. 5,07,000/- (Rupees five lacs seven thousand only) to be paid by the Prospective Purchaser to the Developers at the time and in the manner set out in Clause 3 hereof. The said premises shall have ....