Friday, September 27, 2013

Property VAT liable, conditions apply

CREDAI Chief explains impact of SC ruling on Maharashtra and Karnakata
VAT valid only from date of agreement and on flats under construction

MUMBAI: With the Supreme Court upholding the State Governments’ right to levy Value Added Tax (VAT) on real estate, buyers will have to pay the tax on sale transactions.
Explaining the legal position on the apex court’s interim order on petitions from Maharashtra and Karnataka challenging levy of VAT on sale transaction, developers apex body CREDAI Chairman Mr Lalit Kumar Jain said: “We at CREDAI fought for customers as the taxes are to be paid by customers under agreements.”
However, the supreme court has clarified that state has right to levy VAT on such sale agreements and said it can be only on value addition of goods and that it can only be charged from the date of agreement.
Mr Jain said the judgment clearly lays down that an agreement entered into by a Developer/Builder with the purchaser is a composite contract involving a contact for work and labour and contract for sale and the same comes within the meaning of “works  contract” and the provisions of Article 366(29-A)(b) are applicable. The Supreme Court has consequently dismissed the challenge to the Constitutional Validity of section 2(24) of the MVAT Act.
However, in paragraph 115 of the judgment, the Supreme Court has clarified that activity of construction undertaken by a developer would be deemed as works contract only from the stage the Developer enters into a contract with the flat purchaser.
The top Court has also clarified that the tax is chargeable by the state government only on the value addition made to the goods transferred after the agreement is entered into with the flat purchaser, he said.
The Supreme Court has also said VAT is not payable if a fully constructed flat is sold to the flat purchaser as it would not amount to a works contract.
The Supreme Court while upholding the validity of Rule 58(1-A) has held that 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 their incorporation in the works even though the property in goods passes later, Mr Jain said.
This finding has to be read along with our submission recorded in paragraph 29 of the judgment. Thus, the element of profit cannot be included in the calculation of the value of goods for the purposes of imposing VAT.
The Supreme Court has directed the State Government to bring clarity into Rule 58(1-A) in terms of what is indicated hereinabove.
Addressing the reference made to it, the Supreme Court has held that the law laid down in the case of K.Raheja’s case is correct and has remanded developers’ matter back to the Regular Bench for final disposal.

As CREDAI matter has not been disposed off by the judgment of the Supreme Court and  the interim order passed in our matter will continue to operate till our matter is finally disposed off by the Regular Bench (2 Judge bench) of the Supreme Court, Mr Jain said.

Tuesday, September 3, 2013

Not safe to be a girl – another horror story

She was waiting for her bus to go home after a hectic day’s work. She was alone. Let’s call her Kamala. Suddenly a luxury car came by. The man in driver’s seat lowered his window screen and signed at her: C’mon. Get in. She ignored. He drove for a small distance and returned to repeat his act, this time asking her loudly. She turned her face from him.
He then got off his car and held her hand, ostensibly to drag her into his car. Luckily for her, the bus she was waiting for also rolled in at the same time. Kamala wriggled herself out and quickly ran into the bus.
The man in the car followed the bus, obviously hoping that she would get down somewhere. Meanwhile, the Kamala narrated the horrifying experience to the conductor. He instructed the driver to take the bus to a nearby police station as the car followed the bus.
Sensing trouble, the man in the car disappeared. The police inspector on duty asked Kamala for the car details and all that she could recollect the first two letters of the car “HR”. She panicked and didn’t note any details of the car.

The police officer told Kamala to relax and later sent a lady constable to escort her home.
Note: Girls, this can happen to any one of you. Please note vehicle numbers or just shoot a picture from your mobile phones. Don’t let such rogues escape the law. Be sensible, be safe!

Not Safe to be a Girl in Mumbai