2025-VIL-61-KER
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VAT High Court Cases

Kerala Value Added Tax Act, 2003 - Construction of the apartment, Construction agreement, JDA, Works contract - Petitioner entered into bipartite agreements with land owners to hand over a prescribed share of the built-up area in the constructed complexes in consideration of transfer of proportionate undivided share of the projects. The petitioner remitted tax at the compounded rate only on the turnover received from the buyers under the tripartite agreements, without disclosing the turnover of the built-up area handed over to the land owners - Revenue initiated proceedings for escaped turnover and penalty for suppression of turnover - Whether the transaction between the petitioner and the land owners for handing over a portion of the constructed area in consideration of transfer of undivided share in the land would fall within the definition of "works contract" under the KVAT Act, 2003 and be liable to tax - HELD - the definition of Works Contract under Section 2(lv) of the Kerala VAT Act, 2003 has a wide amplitude and is not restricted to the works contract as commonly understood. The definition does not lay down that the construction must be on behalf of the owner of the property or that the construction cannot be by the owner of the property. Thus, even if an owner enters into an agreement to construct, for cash or for deferred payment or for valuable consideration, a building or a flat on behalf of anyone else, it would be a works contract within the meaning of the term as defined under the Act - The agreement of construction between the petitioner and the land owners squarely falls within the wide definition of "works contract" under Section 2(lv) of the Kerala Value Added Tax Act, 2003. The judgment of the Supreme Court in M/s. Larsen & Toubro Limited & Anr. v. State of Karnataka affirmed the principles laid down in K.Raheja Development Corporation v. State of Karnataka that an undertaking to build as developers for the prospective purchasers would come within the definition of "works contract" and be taxable - the contention of the petitioner relying on the judgment of the Full Bench of the Kerala High Court in M.Jaihind v. State of Kerala cannot be sustained in light of the Supreme Court's pronouncement. Accordingly, the revision petitions filed by the petitioners are dismissed
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