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In other words, they cannot be subjected to tax under the Act and the action in imposing tax on such constructions treating them to be works contract is wholly without jurisdiction. We are, therefore, of the considered opinion that the impugned orders dated 24-3-2006 and 29-5-2006, passed by the Assistant Commissioner, Trade Tax, Sector I, Noida, respondent No. 2, insofar as they relate to imposition of tax on construction of apartments/houses/flats and other construction in question, are wholly without jurisdiction and they cannot be Gift City Ahmedabad and are hereby set aside. Comments in the background of the judgment of the Assotechs’ case cited above A subtle factual distinction was brought out by the Hon’ble Allahabad High Court while delivering the judgment in the Assotechs’ case, on the issue that was before the Hon’ble Apex Court, in the K. Rahejas’ case. The Hon’ble Allahabad High Court observed that in the K. Rahejas’ case the appellants were constructing the unit for and on behalf of the person who had agreed to purchase the flats.

Whereas in the Assotechs’ case the ‘petitioner is constructing the flats/apartments not for and on behalf of the prospective allotters but otherwise. The payment schedule would not alter the transaction. The right, title and interest in the construction continue to remain with the petitioner. It cannot be said that the constructions were undertaken for and on behalf of the prospective allotters and, therefore, the constructions in question undertaken by the petitioner would not fall under clause m of Section 2 read with Section 3F of the Gift City and are outside the purview of the provisions of the Act. Agreements wherein the land and building are conveyed to the purchaser assuming stamp duty is paid on such conveyance are deemed to be transfer of immovable properties and not liable to tax under the VAT/Service Tax laws. This is a highly debated issue and the department in many States have not accepted such transactions as one for sale of an immovable property. However, one can place reliance on the Assotechs’ case cited above and contend that such transactions are not liable for payment of VAT/Service tax. In fact, the arguments can be further strengthened, if the Letter of Allotment issued by builder/ developer to the purchaser contains similar clauses that came to be relied upon by Assotech Realty Pvt Ltd before the Allahabad High Court. It may be noted that the Hon’ble High Court of Karnataka while delivering the judgment in the case of Larsen & Toubro Limited vs.

State of Karnataka WP. No. 16305/ 2006T-KST on 10th July, 2007 have not followed the law laid down by the Allahabad High Court in the Assotech’s case. I am given to understand that Larsen & Toubro have pursued the matter before the Hon’ble Supreme Court of India. I believe that the judgment of the Hon’ble Supreme Court in the Larsen & Toubro’s case as and when delivered will settle this vexed issue. The State of UP filed a special leave petition before the Honourable Supreme Court vides CC-11480-11481/2007 in respect of the High Court judgment in the Assotech’s case. The Hon’ble Supreme Court set aside the judgement of the High Court with liberty to the appellant to move the appellate authorities on the following grounds that the appellant ought to have filed a First Appeal, since a writ petition against an order of assessment was not maintainable. That the nature of right conferred on the allotters of flats/consideration for payments of instalments/whether construction was on its account or on behalf of the allotters were not matters to be decided in a writ.

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