OMEGA SHELTERS (P) LIMITED Vs. ASST COMMISSIONER

JUDGEMENT

(1.) THE petitioners, in this batch of Writ Petitions, are dealers carrying on business in the development of immovable property, and in the sale of residential apartments, villas etc. They are aggrieved by the denial of the benefit of composition under Section 4(7)(d) of the A.P. VAT Act (hereinafter called the "Act") for the construction made by them after execution of a registered sale deed whereby a semi -constructed apartment/flat was sold to the purchaser.

(2.) THE petitioners, who are developers of apartment buildings, villas, houses, commercial complexes etc, identify and purchase land suitable for construction. After preparation of lay outs, and after making provision for necessary amenities such as roads, parks, water, electricity, sewerage, health club and other facilities, they construct houses and sell them after obtaining necessary sanctions. It is their case that for operational convenience, and to enable the buyers to raise loans, the respective plots, with a semi -finished structure, are initially sold to buyers with a pre -condition that development would be undertaken only by the petitioners in terms of the sanctioned plans for such group housing schemes. In some cases only plots are initially sold, and in some others semi -constructed structures are also sold along with the plot or the undivided share of land. Approval is obtained from the concerned authorities before commencement of construction, and prior to the sale of land. The petitioners execute a conveyance in favour of the purchaser, either in respect of the plot of land on which a residential house is to be constructed, or the plot of land with the semi -finished structure.

(3.) INITIALLY an agreement of sale is entered into, by the developer -dealer with the prospective purchasers, with the pre -condition that the purchasers cannot enter into a contract, with any other third party, for construction of a residential apartment, house, building etc. After execution of the sale deed, another agreement is entered into by the petitioner with the purchaser for completion of construction of the residential apartment, buildings etc in accordance with the approved plans and the original document. Every residential house is predesigned, and is a part of the group housing scheme developed by the developer, and the buyer has no say in the matter. The initial agreement of sale, which the developers enter into with prospective buyers for the sale of apartments, includes the consideration receivable on the sale of a semi -finished apartment, and the cost of construction thereafter. The petitioners have all opted to pay tax by way of composition under Section 4(7)(d) and have been paying VAT at 4%/5% of 25% of the total consideration, on these components of the agreements, at the time of registration of the flats or soon thereafter.