OCEANUS DWELLINGS (P) LTD. Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) Petitioner challenges Ext.P6 an order passed in a rectification application filed by the petitioner before the Commercial Tax Officer (Works Contract), Palakkad.

(2.) Petitioner is a works contractor registered under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as 'KVAT Act' for short). He had undertaken construction and sale of nine apartment complexes. The issue relates to the assessment year 2010-2011. Ext.P1 is a notice issued under Section 25 (1) of the KVAT Act. The main objection raised by the petitioner to Ext.P1 was in regard to the taxable turnover, which according to the respondents, should be based on the total purchase made by the petitioner during the assessment year. As per the annual return submitted by the petitioner, the turn over reported was .7,84,44,241.99 and the total purchase was shown as 13,09,24,806/-. The proposal was to treat the purchase cost as the basis for assessment and to add 25% towards gross profit in terms of proviso to Rule 10 (2) (a) of the KVAT Rules. The petitioner filed an objection inter alia stating that out of the total units of 624 apartments, during the year 2010-2011, the petitioner sold only 151. During the previous year, petitioner sold 167 units and there is a balance of 306 units, for which the petitioner had not entered into any contract with purchasers. Therefore, the contention was that as far as the 306 units were concerned, though the petitioner had purchased materials for construction purposes, there is no works contract. However, Ext.P3 assessment order came to be passed. In Ext.P3, the officer asserted the position that the assessment has been made with reference to the total taxable turnover on the basis of the value of goods purchased in terms of proviso to Rule 10 (2) (a). However, nothing has been mentioned with reference to the number of units which remains unsold or for which no agreement was executed by the petitioner with the purchasers. Petitioner, therefore, filed an application under Section 66 of the KVAT Act, 2003 for rectification insofar as no reason had been stated for making such an assessment without considering their specific objection regarding the number of units of apartments which remains unsold. Reference was also made in judgment of the Apex Court in Larsen and Toubro Limited and another v. State of Karnataka and another [2013 (65) VST (1) SC] in order to bring home the position that the absence of any contract being executed with potential purchasers by a builder, there is no works contract. However, by Ext.P6 order, without making any reference to the said contention, the application is rejected.

(3.) The learned counsel for the petitioner submits that there is error apparent on the face of record insofar as the contention of the petitioner that no contract had been executed with reference to 306 apartments has not been considered by the authority and therefore, Ext.P6 is liable to be set aside and the matter requires fresh consideration.