High Court of Punjab and HaryanaCWP/20042/2015disposed of

Puri Construction Pvt. Ltd v. The State Of Haryana And Others

2015-09-19Mr. Justice Surinder Gupta,Mrs Justice Daya Chaudhary4 pages

IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH Decided on : 19.09.2015 Puri Construction Pvt. Ltd., Gurgaon . . . Petitioner

Versus

The State of Haryana and others . . . Respondents CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE RAMENDRA JAIN PRESENT: Mr.Puneet Agrawal, Advocate and Mr. Rishabh Kapoor, Advocate for the petitioner.

**** AJAY KUMAR MITTAL, J. (Oral) This order shall dispose of CWP Nos. 20042 and 20043 of 2015, as according to the learned counsel for the petitioner, the issues involved therein are identical. For brevity, the facts are being extracted from CWP No.20042 of 2015.

In this writ petition filed under Articles 226/227 of the Constitution of India, the petitioner has prayed for issuance of a writ in the nature of Mandamus declaring Rule 25(2) and 25(7) of the Haryana Value Added Tax Rules, 2003 (hereinafter referred to as "the Rules") (Annexure P-3) in particular and other related provisions in so far as they charge tax on expenses and elements of total sale price of flat/unit which have no relationship with value of goods transferred in execution of works contract on developers to be ultra vires the Constitution of India in so far as it violates Article 246 of the Constitution of India read with Schedule VII, List II, Entry 54 and Article 366 (29A) of the Constitution of India; for declaring Rule 25(2) and 25(7) of the Rules (Annexure P-3) in particular and other related provisions as ultra vires since value derived for charging

[ 2 ] sales tax under new Rule 25 does not make any reference to and is more than the value of materials transferred by the developers to the buyers as appearing in the books of account of the developer; for declaring Rule 25(2) and 25(7) of the Rules (Annexure P-3) in particular and other related provisions as ultra vires since the State has not remained bound by its affidavit dated 24.4.2014 on the basis of which this Court in CWP No.

5730 of 2014 had upheld the provisions of Rule 25 of the Rules; for declaring Rule 25(7) of the Rules (Annexure P-3) as ultra vires the provisions of Section 3 read with Sections 6, 2(1)(u) and 2 (1)(zg) of the Rules; for declaring Rule 25(2), (4), (6) and (7) of the Rules (Annexure P-3) as ultra vires and inoperative for being indeterminable; for declaring Rule 25(4) of the Rules (Annexure P-3) in particular and other related provisions of the Haryana Value Added Tax Act, 2003 (in short "the Act") since they seek to charge tax on a transaction not supported by money consideration which cannot be considered to be sale for the purpose of charge sales tax as ultra vires the State's power under Article 246 of the Constitution of India read with Entry 54 of List II of the Seventh Schedule; for declaring Rule 25(4) of the Rules (Annexure P-3) because they seek to charge tax on the basis of presumptive valuation more than the actual consideration charged for transfer of property in goods as ultra vires the State's power under Article 246 of the Constitution of India read with Entry 54 of List II of the Seventh Schedule.

Further, a writ of certiorari has been sought quashing the notices dated 24.11.2014 and 09.02.2015 (Annexures P-1 & P-2) issued by respondent No.3.

A few facts necessary for adjudication of the present writ petition as narrated therein may be noticed. The petitioner is a developer

[ 3 ] engaged in the business of development and sale of apartments/flats/units. Consequent to the directions issued by this Court in CWP No. 5730 of 2014, titled as 'CHD Developers Limited, Karnal v. The State of Haryana and others' decided on 22.4.2015, the Government of Haryana has introduced new set of Rules for computation of turnover for charging tax on developers vide notification dated 23.7.2015 (Annexure P-3) effective from 17.5.2010. A notice dated 24.11.2014 (Annexure P-1) was issued to the petitioner wherein the assessment of the petitioner for the year 2012-13 was sought to be made in accordance with new Rule 25 of the Rules. The said Rules are ultra vires the State's power under Entry 54 List II and are in clear violation of the principles enunciated by this Court in CHD Developer's case (supra). The new Rule 25 of the Rules is ultra vires the Constitution of India and is in clear violation of the law laid down by this court in CHD Developer's case (supra) and the authorities under the Act are bound by the said Rule. Hence, the present writ petitions. 4.

We have heard learned counsel for the petitioner and perused the record.

Learned counsel for the petitioner has laid challenge to the notices 24.11.2014 and 09.02.2015 (Annexures P-1 & P-2) requiring the petitioner to furnish the books of account and certain other information for the said period.

After hearing learned counsel for the petitioner(s), the present writ petitions are disposed of by directing the petitioner(s) to produce the relevant record and to file a detailed and comprehensive representation(s) whereupon the assessing authority shall take a decision in accordance with law by passing a speaking order and after affording an opportunity of

[ 4 ] hearing to each petitioner or its authorized representative. It is, however, clarified that the question of vires is not being adjudicated upon at this stage and it shall be open to the petitioner(s) to approach this Court again laying challenge to the vires in accordance with law, after the decision by the concerned authority, if need so arises.

(AJAY KUMAR MITTAL) JUDGE (RAMENDRA JAIN) September 19, 2015 JUDGE J.Ram