ASSOTECH SUPER TECH (J V ) PANTNAGAR, UDHAM SINGH NAGAR Vs. STATE OF UTTARAKHAND, THROUGH SECRETARY MINISTRY OF FINANCE & SALE TAX, UTTARAKHAND

JUDGEMENT

(1.) BY means of this writ petition, moved under Article 226 of the Constitution of India, the petitioner has sought writ in the nature of certiorari quashing the order dated 17.04.2007 and 16.03.2007 (copies annexure 10 and 11 to the writ petition), issued by Deputy Commissioner, Commercial Tax, Rudrapur. A further mandamus has been sought directing the respondents not to levy or collect tax on civil construction works undertaken by the petitioner. A declaration has also been sought to the effect that civil works undertaken by the petitioner is not liable for payment of tax and that levy and collection of Sales Tax is in violation of Article 265 of the Constitution and provisions of the Uttaranchal Value Added Tax Act, 2005.

(2.) HEARD learned counsel for the parties and perused the affidavit, counter affidavit, rejoinder affidavit, supplementary affidavit and supplementary counter affidavit, filed by the parties.

(3.) BRIEF facts of the case, as narrated in the writ petition are that the petitioner is a partnership firm created under registered partnership deed dated 07.09.2006 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 Uttaranchal Value Added Tax Act, 2005 (for short hereinafter referred as VAT Act, 2005). A copy of 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 30.05.2006 and 08.06.2006 allotting 50 acres of land in Pantnagar, a copy of allotment letter containing terms and conditions of allotment is annexed as annexure 3 to the writ petition. The allotment letter clearly indicates that petitioner, after allotment, within a specified time, shall prepare residential project for construction of residential flats, which would be subsequently allotted on approved terms and conditions to the prospective buyers. It is alleged by the petitioner that the residential flats constructed by the petitioner would continue to belong to it notwithstanding the allotment and the transfer of property was to take place only of the completed flats by the petitioner. It is further alleged that the petitioner has purchased the land through SIDCUL. The project for construction of the residential flats prepared in terms of the allotment letter, was approved by the SIDCUL vide letter dated 03.11.2006 (copy of which is annexed as annexure 4 to the writ petition). Petitioner issued an advertisement in response to which large number of people applied for allotment of flats / dwelling units to be developed by the petitioner in accordance with the lay out plans sanctioned by SIDCUL. Petitioner is issuing allotment letters to the prospective buyers, a copy of which is annexed as annexure 5 to the writ petition, only to ascertain and bind the applicants as future buyers. Such applicants / prospective buyers have no right, title or interest in the dwelling units allotted to them till the transfer deed is executed in their favour. Petitioner's case is that he is not constructing the dwelling units on behalf of anyone else and the same is undertaken by the petitioner on his own behalf. Referring to the definition of the 'works contract' given under VAT Act, 2005, it has been stated in the writ petition that the tax is leviable only if 'works contract' is undertaken by a dealer on behalf of someone else. It is further stated since the contract in question is not under any agreement for carrying out building project as such in view of Article 265 of the Constitution of India, tax cannot be levied on the civil works undertaken by the petitioner as the same would be without any authority of law. The respondents, taking shelter of principle contained in M/s K. Raheja Development Corporation Vs. State of Karnataka 2005 NTN (Vol.27) -243, started recovering tax at the rate of 4% by getting the same deducted from the prospective buyers like Parley Biscuits, Bajaj Auto Limited, etc.. On 28.12.2006, the petitioner under mistaken belief both on fact and law, applied for compounding under the compounding scheme dated 08.08.2006. 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 23.03.2007, passed by Allahabad High Court in 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 17.04.2007 (copy annexure 10 to the writ petition), issued by 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 16.03.2007 (copy annexure 11 to the writ petition), whereby the said authority has passed order under Section 35(1) of VAT Act, 2005, directing that the petitioner would be liable to pay 1% of trade tax under compounding scheme, are challenged.