- (1.) In both the writ petitions, filed by M/s. Assotech Realty Private Limited, the petitioner has sought quashing of the orders dated 24-3-2006 and 29-5-2006, respectively, passed by the Assistant Commissioner, Trade Tax, Sector I, Noida, Respondent No. 2, in so far as they relate to imposition of tax upon the petitioner treating it to be executing work contract.
(2.) Briefly stated, the facts giving rise to the present petitions are as follow :- The petitioner is a private company incorporated under the provisions of the Companies Act, 1956. It has its registered office at 5-7, DDA Shopping Complex, Mayur Vihar, Phase I, Delhi and head office at F-27-28, Sector 18, Noida, district Gautam Budh Nagar in the State of U.P. The petitioner is engaged in the business of developing the land purchased from various authorities and constructing houses with intention of selling them for consideration to the interested persons/allottees. According to the petitioner, it had purchased 43123.756 sq. meters of land situate at 5, Vaibhav Khand, Indirapuram, Ghaziabad from the Ghaziabad Development Authority, Ghaziabad for development of group housing. The land is free hold land. It proposed construction of an integrated group housing complex, known as "Windsor Park". After the land was transferred by the Ghaziabad Development Authority, the petitioner advertised the construction and proposed sale of houses/flats in the group housing complex, known as "Windsor Park". Several persons had shown their interest for purchase of the flats/houses. The petitioner had allotted the houses/flats to various allottees. In the allotment letter, it has been specifically mentioned that the terms and conditions of allotment are subject to the sale deed to be signed between the parties. Common areas and facilities, such as park, parking, public amenities, community hall, etc., as approved in the lay out plan, was to remain the property of the petitioner and no right would accrue to the allottees till a sale deed is executed and registered. According to the petitioner, it continued to be the owner of the apartments/flats and construction thereon till the execution of the registered sale deed. It is the case of the petitioner that it does not undertake to make any construction for and on behalf of the purchasers/allottees and all the constructions made by it are on its own account in accordance with the lay out and sanctioned map approved by the Ghaziabad Development Authority. No construction have been undertaken on the request of the allottees. The Assistant Commissioner, Trade Tax, Sector I, Noida, Respondent No. 2, issued a notice purporting to be under Section 7(3) of the U.P. Trade Tax Act, 1948 (hereinafter referred to as "the Act") calling upon it to appear in 29-12-2005 for verification of the papers in respect of the assessment year 2004-05 U.P./Central. The aforesaid notice was issued on the basis of a decision of the Apex Court in the case of K. Raheja Development Corporation v. State of Karnataka, 2006 (3) S.T.R. 337 (S.C.). The petitioner submitted its reply stating, inter alia, that the principle laid down in the aforesaid decision of the Apex Court is not applicable in the case of the petitioner inasmuch as the petitioner has not undertaken any construction work for and on behalf of the prospective allottees/purchasers and the title in the flats/apartments so constructed passes to the purchasers only upon execution of the sale deed and its registration. Till such time the sale deed is not executed, the right, title and interest including the ownership and possession in the construction so made remains with the petitioner. In the circumstances, the notice was requested to be discharged. The Respondent No. 2, vide order dated 24-3-2006, had passed an assessment order holding that the petitioner was liable to be pay taxes on the value of the materials used in the constructions of flats/apartments/ houses on the ground that the said constructions have been made for and on behalf of the prospective allottees/purchasers. Similar order has been passed by the Respondent No. 2 on 29-5-2006 for the assessment year 2005-06 U.P./Central. Both the orders have been separately challenged in the aforesaid two writ petitions.
(3.) In the counter affidavit filed by Sri C.L. Gupta, Assistant Commissioner, Sector I, Sales Tax, Noida, Respondent No. 2, on behalf of the respondents, it has been stated that even though the registration has been done after completion of the construction but the petitioner has issued the allotment letter to different customers much before the flats are sold. The money has been received by the petitioner in instalment and the money is being realised from the respective purchasers till the construction is complete. Thus, the price of the flat has been charged by the petitioner in instalment. The petitioner is constructing the flat after receiving the instalment from the allottees for whom the flats are being constructed. It is true that after the registered sale deed, the flats will be sold to the allottees but it is a contract between the petitioner and the allottees on the conditions specified in the contract for sale of flats and the prices of the flat is being paid by the allottees as advance money in instalment till the construction is complete. The facts of the case of the petitioner are similar to the facts of the case of M/s. K. Raheja Development Corporation (supra). It has further been stated that before the completion of the construction until it is ascertained that which flat belongs to which purchaser, the ownership remains with the contractor till the registered sale deed is executed but the houses are constructed on the basis of the agreement entered into between the builder and the purchaser, which establishes that the construction is being made for and on behalf of the prospective allottees/purchasers.;