Case Law Details
Smart Value Homes (Peenya Project) Private Limited Vs Joint Commissioner Commercial Taxes (Karnataka High Court)
The Hon’ble Karnataka High Court in the case M/s. Smart Value Homes (Peenya Projects) Private Limited vs. Joint Commissioner, Commercial Taxes (Appeals) and Others [S.T.R.P No. 47 of 2022 dated August 23, 2023] allowed the revision petition and held that the Prime Location Charges (“PLC”)/ Floor Rise Charges (“FRC”) would not fall within the definition of works contract under the Karnataka Value Added Tax Act, 2003 (“the KVAT Act”) and such charges incurred by the buyer would fall within the purview of Service Tax.
Facts:
M/s. Smart Values Homes (Peenya Projects) Private Limited (“the Petitioner”) is engaged in the business of Development and Construction of Residential Apartments. The Petitioner, while undertaking a project, collected PLC/FRC for flats located in prime locations. The Petitioner has discharged the service tax liability which is payable on PLC/FRC. However, the Petitioner has claimed exemption from payment of tax under the KVAT Act.
The Assistant Commissioner of Commercial Tax (“the Respondent”) vide order dated February 17, 2018 (“the Order in Original”) rejected the claim of exemption from payment of tax under the KVAT Act and imposed tax along with penalty. Aggrieved by OIO, the Petitioner filed an appeal before the Joint Commissioner of Commercial Taxes vide order VAT.AP.NO.161/17-18 dated April 26, 2019 (“the Order in Appeal”) wherein the Joint Commissioner dismissed the appeal on the ground that PLC/FRC charges are part of taxable turnover under VAT.
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