- (1.) This matter arises on the provisions of Karnataka Sales Tax Act, 1957 .
(2.) On 4th October, 2005, notice under Section 29(1)(e) and 29(2)(e) of Karnataka Sales Tax Act, 1957 , came to be issued. It was addressed to the petitioner M/s. Larsen & Toubro Limited. It was alleged that the petitioner is engaged in property development involving construction and building of flats and subsequent sale thereof. By a separate statement details of sale of flats was given. Those sales relate to the period 2000-2001 to 2004-2005. According to the Show Cause Notice the Department alleged that the petitioner has not been paying taxes on sale transactions of flats on the ground that the same relates to sales of complete flats, claimed as sale of immovable property. The Show Cause Notice further goes on to state that in view of the recent judgment of this Court in the case of M/s. Raheja Development Corporation V/s. State of Karnataka, 2005 5 SCC 162 the consideration received towards sale of flats even though on ownership basis are also liable to tax for the reason that such transactions of construction and sales of individual flats are in the nature of works contract and thus liable to tax under the provisions of the said 1957 Act.
(3.) In short, the entire controversy turns around the ratio of the judgment of this Court in Raheja Development Corporation case . Before coming to the said judgment we quote hereinbelow Section 2(t) which defines the word Sale :- Section 2(t) : Sale with all its grammatical variations and cognate expressions means every transfer of the property in goods other than by way of a mortgage, hypothecation, charge or pledge by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes - (i) a transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (ii a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (ii a delivery of goods on hire-purchase or any system of payment by instalments; (iv a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.;