TaxTMI 
TaxTMI 
2007 (3) TMI 32
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....g them for consideration to the interested persons/allottees. According to the petitioner, it had purchased 43123 .756 sq. meters of land situate at 5, Vaibhav Khand, Indirapuram, Ghaziabad from the Ghaziabad Development Authority, Ghaziabad for development of group housing. The land is free hold land. It proposed construction of an integrated group housing complex, known as "Windsor Park". After the land was transferred by the Ghaziabad Development Authority, the petitioner advertised the construction and proposed sale of houses/flats in the group housing complex, known as "Windsor Park". Several persons had shown their interest for purchase of the flats/houses. The petitioner had allotted the houses/flats to various allottees. In the allotment letter, it has been specifically mentioned that the terms and conditions of allotment are subject to the sale deed to be signed between the parties. Common are and facilities; such as park, parking, public amenities, community hail, etc., as approved in the lay out plan, was to remain the property of the petitioner and no right would accrue to the allottees till a sale deed is executed and registered. According to the petitioner, it continu....
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....registration has been done after completion of the construction but the petitioner has issued the allotment letter different customers much before the flats are sold. The money has been received by the petitioner in instalment and the money is being realised from the respective purchasers till the construction is complete. Thus, the price of the flat has been charged by the petitioner in instalment. The petitioner is constructing the flat after receiving the instalment from the allottees for whom the flats are being constructed. it is true that after the registered sale deed, the flats will be sold to the allottees but it is a contract between the petitioner and the allottees on the conditions specified in the contract for sale of flats and the prices of the flat is being paid by the allottees as advance money in instalment till the construction is complete. The facts of the case of the petitioner are similar to the facts of the case of M/s. K. Raheja Development Corporation (supra). It has further been stated that before the completion of the construction until it is ascertained that which flat belongs to which purchaser, the ownership remains with the contractor till the register....
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....tted that the petitioner is a dealer within the meaning of clause (c) of Section 2 of the Act. Further, the works executed by the petitioner fall within the definition of the words "works contract", as given in clause (m) of Section 2 of the Act, and in view of the provisions of Section 3F of the Act, the petitioner is clearly liable to pay taxes on goods used in execution of the works contract. According to him, the principle laid down by the Apex Court in the case of K. Raheja Development Corporation (supra) is squarely applicable in the present case inasmuch as the construction has been made by the petitioner on receiving the advance price in instalment. Thus, the constructions have been undertaken for and on behalf of the prospective allottees/purchasers. He also raised a plea of alternative remedy being available to the petitioner as a statutory appeal under Section 9 of the Act would lay before the appellate authority, for which he has relied upon a decision of the Apex Court in the case of State of U.P. v. Anil Kumar Ramesh Chandra Glass Works and another, (2005) 11 SCC 451. 8. In reply, Sri Dwivedi submitted that even though a statutory appeal under Section 9 of the Act is....
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.... Article 226 of the Constitution, in a given case although may not entertain a writ petition inter alia on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. Despite existence of an alternative remedy, a writ court may exercise its discretionary jurisdiction of judicial review inter alia in cases where the court or the tribunal lacks inherent jurisdiction or for enforcement of a fundamental right or if there has been a violation of a principle of natural justice or where vires of the act is in question. In the aforemention circumstances, the alternative remedy has been held not to operate as a bar. [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and other, (1998) 1 SCC 1, Sanjana M. Wig v. Hindustan petroleum Corpn. Ltd., (2005) 8 SCC 242, State of H.P. v. Gujarat Ambuja Cemant Ltd. and another, (2005) 6 SCC 499] 13. In the case of Star Paper Mills Ltd. v. State of U.P. and other, 2006 AIR SCW 5782, the Apex Court has held as follows:- "5. The issue relating to entertaining writ petitions when alternative remedy is available, were examined by this Court in several cases and recently in State of Hima....
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....r. Similar view has been reiterated in N.T. Veluswami Thevar v. G. Raja Nainar and Ors. (AIR 1959 SC 422); Municipal Council, Khurai and Anr. v. Kamal Kumar and Anr. (AIR 1965 SC 1321); Siliguri Municipality and Ors. v. Amalendu Das and Ors, (AIR 1984 SC 653); S.T. Muthusami v. K. Natarajan and Ors. (AIR 1988 SC 616); R.S.R.T.C. and Anr. v. Krishna Kant and Ors. (AIR 1995 SC 1715); Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors. (AIR 2000 SC 2573); A. Venkatasubbiah Naidu v. S. Chellappan and Ors. (2000 (7) SCC 695); and L.L. Sudhakar Reddy and Ors. v. State of Andhra Pradesh and Org. (2001(6) SCC 634); Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha and Anr. v. State of Maharashtra and Org. (2001 (8) SCC 509); Pratap Singh and Anr. v. State of Haryana (2002 (7) SCC 484) and G.K.N. Driveshafts (India) Ltd. v. Income Tax Officer and Ors. (2003 (1) SCC 72). 9. In Harbans Lal Sahnia v. Indian Oil Corporation Ltd. (2003 (2) SCC 107), this Court held that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and the Court must consider the pros and con....
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....n of action including imposition of tax on the constructions undertaken has been made on the ground that it is wholly without jurisdiction. Thus, we are not inclined to throw away the petitions on the ground of alternative remedy. 15. Coming to the merits of the case, we find that under clause (c) of Section 2 of the Act, the word "dealer" has been defined as follows :- "2. Definitions. - In this Act, unless there is anything repugnant in the subject or context, - (c) "dealer" means any person who carries on in Utter Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration and includes - (i) a local authority, body corporate, company, any co-operative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such business; (ii) a factor, broker, arhati, commission agent, del credere agent, or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, su....
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....ferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair, or commissioning of any movable or immovable property;" 17. Section 3F of the Act imposes the liability of tax on the right to use any goods or goods involved in execution of works contract. It reads as follows :- "3F. Tax on the right to use any goods or goods involved in the execution of works contract. (1) Notwithstanding anything contained in section 3A or section 3AAA or section 3D but subject to the provisions of sections 14 and 15 of the Central Sales Tax Act, 1956, every dealer shall, for each assessment year, pay a tax on the net turnover of - (a) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment of other valuable consideration; or (b) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, at such rate not exceeding fifteen per cent as the State Government may, by notification, declare and different rates may be declared for different goods or different....
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....he works contract; (xi) the amount representing the cost of establishment and other similar expenses of the contractor to the extent it is relatable to supply of labour and services; (xii) the amount representing the profit earned by the contractor to the extent it is relatable to the supply of labour and services. (3) Where in respect of transfer referred to in clause (b) sub-section (1), the contractor does not maintain proper accounts or the accounts maintained by him are not found by the assessing authority to be worthy of credence and the amount actually incurred towards charges for labour and other services and profit relating to supply of labour and services are not ascertainable, such charges for labour and other services and such profit may, for the purposes of deductions under clause (b) of sub-section (2), be determined on the basis of such percentage of the value of the works contract as may be prescribed and different percentages may be prescribed for different types of works contract." 18. From a conjoint reading of clause (m) of Section 2 and Section 3F of the Act, it is seen that to be a works contract under the Act, the activities mentioned therein ought to hav....
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....de only on the payment of the entire amount stipulated and only on receipt of the completion/occupation certificate from the statutory and other authorities." From a reading of the aforesaid clauses, we find that the specification, plan, price payment, schedule and lay out plan as has been proposed by the petitioner is to be agreed by the parties. Further, the petitioner has been empowered to mortgage the land and apartments of the said complex to raise construction/finance/demand loan for the construction of the complex, from the Banks/Financial Institutions. The only stipulation is that the sale deed would be executed and registered free from all encumbrances. The allottees are to strictly adhere to payment schedule failing which liability for payment of interest accrues. The allottees do not get any right in the apartment until a sale deed is executed and registered and the petitioner continues to remain the owner of the apartment as also the construction thereon. The allotment letters does not give any right, title and interest to the allottees even though full payment has been received by the petitioner. The petitioner is empowered to make variations/modifications in the plan....
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....he definition of the words "works contract" given under the said Act is very wide and is not restricted to a works contract as commonly understood, i.e., a contract to do some work on behalf of some body else. It has held as follows :- "The definition would therefore take within its ambit any type of agreement wherein construction of a building takes place either for cash or deferred payment, or valuable consideration. To be also noted that the definition does not lay down that the construction must be on behalf of an owner of the property or that the construction cannot be by the owner of the property. Thus even if an owner of property enters into an agreement to construct for cash, deferred payment or valuable consideration a building or flats on behalf of anybody else it would be a works contract within the meaning of the term as used under the said Act." (underlined by us) 21. After considering the various clauses of the agreement which is reproduced below, entered into with the purchasers in the aforesaid case, "(q)(i) Construction of the said multi-storeyed building; (ii) Sale of the units in the aforesaid multistoreyed building to different persons in whose favour ultima....
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....nd 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 the amenities set out in the Fourth Schedule hereunder written.............. 5. The under mentioned terms and provisions are express conditions to be observed, performed and fulfilled by the Prospective Purchaser, on the basis of which this Agreement has been entered into by the Holders/Developers and the due and proper fulfillment whereof are to be conditions precedent to any title being created and/or being capable of being documented by the Prospective Purchaser in the aforesaid fractional interest in the land described in the First Schedule hereunder written and/or in the said premises: (a).............................. (b)....................
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....perty. Of course, under clause 7 they have right to terminate the Agreement and to dispose of the unit if a breach is committed by the purchaser. However, merely having such a clause does not mean that the agreement ceases to be a works contract within the meaning of the term in the said Act. All that this means is that if there is a termination and that particular 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 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." 22. In the aforesaid case, the agreement provided that K. Raheja Development Corporation, as developer on its own behalf and as developer of such person, would construct the flats as a unit ultimately to belong to such person In the aforesaid case, K. Raheja Development Corporatio....