2023 (10) TMI 346

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....-15] and STA No.266/2019 [Assessment Year 2015-16], passed by the KAT [Karnataka Appellate Tribunal], Bengaluru. STRP No.47/2022 has been admitted to consider following questions of law: 1. Whether the Karnataka Appellate Tribunal is correct in rejecting Petitioner's claim of deduction/exemption on Prime Location charges? 2. Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in dismissing the STA No.266/2019 filed by the Petitioner, by upholding the orders of the First Appellant Authority and the Assessing Authority, insofar as the rejection of deduction claimed by the Petitioner on Prime Location Charges? STRP No.3/2022 has been admitted to consider following questions of ....

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.... residential apartments. It had undertaken a project at Peenya. Assessee has collected 'Prime Location Charges (PLC)/ Floor Rise Charges (FRC)' in respect of those flats which are situated in the prime locations. Assessee's case is that it has discharged the service tax liability payable on the PLC/FRC and it is not liable to pay any tax under the KVAT Act attributable to PLC/FRC. 5. Assessee claimed exemption from payment of KVAT on PLC/FRC. The ACCT [Assistant Commissioner of Commercial Tax] cum the AO [7Assessing Officer] rejected the exemption claim and levied tax and penalty. Aggrieved, assessee filed an appeal before the JCCT [Joint Commissioner Of Commercial Taxes]. The JCCT also rejected assessee's claim for deduction fro....

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....lected as part and parcel of the selected residential flats by flat buyers and PLC/FRC is included in the contract receipts and therefore, PLC/FRC cannot be exempted from levy of tax under the KVAT Act. 9. In support of his contentions, Shri. Neeralgi has placed reliance on Larsen and Toubro Limited and Another Vs. State of Karnataka and Anr [(2014) 1 SCC 708]. 10. We have carefully considered the rival contentions and perused the records. 11. Undisputed facts of the case are, assessee is engaged in the business of development and construction of residential apartments. Assessee has collected PLC and FRC from the buyers and discharged the service tax payable on PLC/FRC. 12. Revenue's main contention is that, PLC/FRC falls within....

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....arges are attributable to the preferences of a customer in relation to the direction in which a flat is constructed, the floor on which it is located and view from the residential unit etc. 18. The estimate and actual cost of construction depends upon the material used for construction. The cost of construction shall be the same without reference to the direction of the flat, the view from a particular flat vis-à-vis the other flat situated on the same floor. The PLC/FRC are based on the choice of buyer and cannot be treated as cost of construction. For example, a flat situated on a higher floor over-looking a garden or seashore shall have better locational advantage than the flat in the same floor from where the garden or the sea....