Analysis of Supertech Ltd. v. Commissioner of Commercial Tax, UP – Sales Tax Revision 3 of 2017 decided on 6/1/2017–
Issue: Whether sales tax attracted merely because the flats were booked by prospective buyers while the same were under construction? Whether K. Raheja and Larsen & Toubro & Ors. judgments universally applicable without regard to the facts and circumstances of the case?
The assessee was a developer/builder who had entered into Agreements for Sale of flats while they were under construction. Following K. Raheja 2005 (5) SCC 162 and Larsen and Toubro Limited and another Vs. State of Karnataka and another 2014 (303) ELT 3 (SC) the Tribunal confirmed the order of revision holding that it was settled law that tax was now payable on the goods used in the construction of flats sold to prospective buyers while the said flats were under construction.
The petitioner contended that the facts in the aforesaid judgments were different in as much as Tripartite agreements had been entered into and the land was sold first to the prospective flat buyers and thereafter construction was virtually being done by the Builders as contractors for the present landowners (Flat buyers).
However, allotment letters and the vital fact that the Builder itself was the owner of the land and the property was to vest only upon execution of registered Deed as held by the SC in Suraj Lamp and Industries Private Limited (2) through Director Vs. State of Haryana 2012 (1) SCC 656 were not taken cognisance off.
The Court held that Tribunal had proceeded on the presumption that the issue was now concluded in the above SC judgments and did not take into account the material fact that no Development agreements had been entered into by the Builders with the Landowners.
The Tribunal had not examined any of the clauses of agreement, nor the nature of transaction itself examined to ascertained whether a works contract had come into existence or not. It was also observed therein that rights were also created in respect of immovable property in favour of the allottees and not the goods in question.
As the factual aspects were not even looked at and were dealt with in a summary and cursory manner by the Tribunal, which is the highest fact-finding body, the order of the Tribunal was set aside with a direction to reconsider the matter in the light of the above observations made by the Court after affording opportunity of hearing to the parties concerned preferably within a period of four months.