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Larsen

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Whether the development agreement is work contract liable for sale taxes under Karnataka sale Tax and also the materials used in the building are liable for sale tax ; Like wise those works are liable under VAT MVAT under Maharashtra laws Sale Tax on development agreement and sale tax on the goods used while constructing building under Karnataka sale tax and also value added tax under Maharashtra = value of the goods which can constitute the measure of the levy of the tax has to be the value of the goods at the time of incorporation of goods in the works even though property in goods passes later. Taxing the sale of goods element in a works contract is permissible even after incorporation of goods provided tax is directed to the value of goods at the time of incorporation and does not purport to tax the transfer of immovable property. The mode of valuation of goods provided in Rule 58(1A) has to be read in the manner that meets this criteria and we read down Rule 58(1-A) accordingly. The Maharashtra Government has to bring clarity in Rule 58 (1-A) as indicated above. Subject to this, validity of Rule 58(1-A) of MVAT Rules is sustained. Once we have held that Raheja Development1 lays down the correct law, in our opinion, nothing turns on the circular dated 07.02.2007 and the notification dated 09.07.2010. The circular is a trade circular which is clarificatory in nature only. The notification enables the registered dealer to opt for a composition scheme. The High Court has dealt with the circular and notification. We do not find any error in the view of the High Court in this regard. Moreover, the Advocate General for Maharashtra clearly stated before us that implementation of Rule 58(1-A) shall not result in double taxation and in any case all claims of alleged double taxation will be determined in the process of assessment of each individual case. 126. After having given answer to the reference, we send the matters back to the Regular Bench for final disposal.

published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40833     REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8672 OF 2013 (Arising out of SLP(C) No.17741 of 2007)       M/s. Larsen & Toubro Limited & Anr. …… Appellants   Versus   State of Karnataka & Anr. ……Respondents   WITH   CIVIL APPEAL NOS. 8673-8684 … Continue reading

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