C.A. Prem T. Chhatpar
Judgments of the Bombay High Court in the case of Marathi Bandhkam and Ashok Gokani (Flat buyer) vindicate my stand that the MCHI judgment had merely decided the constitutional validity of the amendment made to the definition of sale and not whether a particular contract is a works contract or not, which is required to be determined by the Assessing authorities on the facts of each case. The very Trade Circulars based on which Builders either paid up tax or recovered tax from the poor flat buyers have been held to be not binding on Assessing authorities who have to exercise their quasi judicial functions to decide independently on the basis of facts on record whether a particular contract for Building construction is a works contract or not.
+Further Update on 19.04.2015
Further to the article published in August 2012 titled VAT on booking of Flats under construction – A big question mark and the subsequent judgments delivered by the Bombay High Court in the case of Ashok Gokani and Marathi Bandhkam delivered on 30/10/2012. ITwo more judgments which vindicate my stand that no tax is payable on Agreements to Sell as commonly understood as per Maharashtra model (as distinct from the K.Raheja model prevalent in Karnataka) are as follows-
While I agree that there are adverse observations in the SC judgment in the case of Larsen & Toubro and the judgment seems to suggest that even Agreements to Sell are “works contracts”, the very judgment also states in para 121 of the judgment (reproducing para 34 of the Bombay High Court judgment in the case of MCHI) that whether a contract is a works contract or not would depend on the facts of each case.