ABAD Judgment

3/15/22, 7:53 PM Case Judgement
file:///C:/Users/user/Desktop/ABAD Case Judgment_files/content21.html 1/22

2018 P T D 1487
[Sindh High Court]
Before Munib Akhtar and

Abdul Maalik Gaddi, JJ
ASSOCIATION OF BUILDERS
AND DEVELOPERS OF PAKISTAN
Versus
PROVINCE OF SINDH and

others
Constitutional Petition
No.D-3723 of 2013, decided on 23rd January, 2018.
(a) Interpretation of
statutes---
----Fiscal
statute---Charging provision---Scope---Interpretation of a charging provision
in a fiscal st
favourable to taxpayer is to be adopted.
(b) Sindh Sales Tax on

Services Act (XII of 2011)---
----Ss.2 (79)(96),
3(c)(d), Second Sched., Heading No. 9807.0000, 9814.3000 &
9824.0000---Transf
Property Act (IV of 1882), S.54---Constitution of
Pakistan, Art. 199---Constitutional petition---Tax on serv
-Construction
industry---Petitioners were related to construction industry in one way or the
other and they
aggrieved of notices issued by authorities for recovery of
tax under Tariff Heading Nos. 9807.0000, 9814
& 9824.0000 of Second
Schedule, Sindh Sales Tax on Services Act, 2011, from them for providing
services---Validity---Any activity in which relationship between service
provider and recipient was govern
a contract for sale in terms of S.54 of
Transfer of Property Act, 1882, was not to constitute a service withi
meaning and scope of the Tariff Heading---Tariff Heading was applicable to a
situation where (i) the ac
could be regarded as a service directly and
materially related to the construction of immovable property as
and (ii)
the activity could not more naturally and properly be regarded as coming within
the scope of some
Tariff Heading; condition (i) must be shown to exist,
and condition (ii) must not be applicable---Tariff He
No. 9824.0000 of
Second Schedule, Sindh Sales Tax on Services Act, 2011, could raise complex
issue
question and its application might not be a simple and
straightforward as the bare language of the Entry m
suggest at first
sight---Application of Tariff Heading No. 9824.0000 of Second Schedule, Sindh
Sales Ta
Services Act, 2011, was quite fact-sensitive and much more than
the other two Headings---Sindh Revenue B
and departmental authorities had
seriously and to an extent fundamentally misunderstood and misapplied S
Sales Tax on Services Act, 2011, and more specifically the three Tariff
Headings in question---Notices issu
petitioners disclosed an approach that
was rather simplistic and superficial and had run counter to
requirements
of the statute---Serious errors of law were made at a fundamental level and no
attempt was ma
discover the facts applicable to each petitioner and to the
extent that the facts were set out at all the same
not fully appreciated
or explored---High Court quashed the notices and orders in question as the same
wer
sustainable---High Court restrained the authorities from taking or
continuing with any action or proceedin
terms or in respect thereof---High
Court clarified that the same would not prevent the authorities from initi
fresh proceedings or taken action anew in accordance with Sindh Sales Tax on
Services Act, 2011 (if at all
proceedings and / or actions were lawfully
sustainable) but at all times and in manner only that was cons
with the
judgments of superior courts---Constitutional petition was allowed accordingly.
Federation of Pakistan and others v. Haji Muhammad Sadiq

and others 2007 PTD 67 = 2007 CL
Defence Authority Club and others v.
Federation of Pakistan and others 2007 PTD 398; Pakistan Internat
Freight
Forwarders Association v. Province of Sindh and another 2017 PTD 1; State of
Madras v. Ga
Dmkerley and Co. AIR 1958 SC 560; K. Raheja Development
Corporation v. State of Karnataka AIR 200
2350, (2005) 5 SCC 162; Magus
Construction (Pvt.) Ltd. and another v. Union of India and others (2009) 3
161; Larsen and Touhro Limited and another v. State of Karnataka and another
(2014) 1 SCC 708; BSN
Union of India (2006) 3 SCC 1; Propulsion

Technologies Inc. v. Aitwood Corporation 369 F.3d 896 (2004
Bunebrake v.
Cox 499 F.2d 951 (1974) ref.
Dr. Muhammad Farogh Naseem along with Pooja Kalpana,

Munawwar Hussain, Nasir Latif Khan
Syed Ziauddin, Amjad Jawed Hashmi,
Muhammad Ali Lakhuni, Umar Lakhuni, Taimur Ali M
Khalid Jawed Khan along
with Asad Raza Khan and Muhammad Aleem for Petitioners.
Anwar Mansoor Khan along with Umaimah Anwar Khan,

Atifuddin along with Syed Zainul Abdin
Deputy Commissioner, SRB
Saifullah, A.A.G. along with Ms. Nasreen Sehto State Counsel fo
Province,
Asim Mansoor Khan, D.A.G. for the Federation for Respondents.
ORDER
MUNIB AKHTAR, J.---(1) By this judgment, we intend

disposing off the petitions listed in pa
below. The petitions arise under
the Sindh Sales Tax on Services Act, 2011 ("Act"). The petitioners,
who a
one way or another Part of the construction industry (a term used
here not in any legal sense), are, for re
stated herein below, aggrieved
by the levy, or intended levy, of provincial sales tax under the Act. Their
stated briefly, is that they do not come within the ambit of the Act as
they do not provide services at all, or a
rate do not provide services
within the meaning of the Act. The petitions can, for convenience, be regard
primarily challenging two types of show-cause notices. In one category are
those notices whereby the petiti
are required to show cause why they
should not be registered in terms of the Act. The petitioners submi
such
registration is an obvious preclude to the levy of the provincial sales tax. In
the other category are
notices whereby the petitioners are not merely
directed to get themselves registered, but also to show cause
certain
stated amounts may not be recovered from them as tax payable under the Act. In
at least one c
appears that an order-in-original has been made against
the petitioner concerned requiring registration unde
Act, and payment of
the tax as specified in the order. The issues raised in all the petitions are
however the sa
2. Before proceeding to note the submissions made by learned

counsel, it will convenient to set out som
the relevant provisions of the
Act. Section 2(79) defines "services" as, inter alia, including those
services
in the First Schedule to the Act. The tax itself is levied on a
"taxable service" which expression, section
tells us, has the
meaning as given in section 3. That section, in its subsection (1), inter alia
states that a ta
service is one that is listed in the Second Schedule to
the Act. We are concerned with tariff headings
9807.0000, 9814.3000 and
9824.0000. These entries, as set out in the First and Second Schedules, a
follows:--
Tariff First Schedule Second Schedule

Heading
No.
9807.0000 Services provided or Services provided or
rendered by property
rendered by property developers or promoters for (a) development of
developers and promoters purchased
or leased land for conversion into
residential or commercial plots. (b)
construction of residential or commercial units.
9814.3000 Services provided or Property developers or
promoters
rendered by architects,
town planners,
contractors, property
developers or
promoters,
interior decorators….
Property developers, or
promoters
9824.0000 Construction services Construction services

(We may note that in the period over which these petitions are
spread, 2013-2016, various provisions of the
including the entries noted
above and the rate of the tax, underwent certain changes and amendments.
How
the position as set out herein above suffices for present purposes.)
3. Learned counsel

appearing for the petitioner in C.P. D-5194/ 2013 drew attention to the
show-
notice issued under section 24 of the Act (which, in its first two
subsections, sets out the persons required
registered) and to the tariff headings
referred to above. Referring to heading No. 9807.0000 as set out in the
Schedule, learned counsel submitted that the "and" between
"property developers" and "promoters" had
read
conjunctively. However, the Second Schedule used the word "or", which
would indicate a disjun
reading. Referring to the notice, it was submitted
that the petitioner was identified as a "builder", a term not
in
the Act itself. In any case, none of the terms and expressions used (such as
"developer" and "promoter"
defined. It was submitted
that since the Act was a fiscal statute, its charging provisions had to be
cons
accordingly. The First Schedule Controlled, and the "or" in
the Second Schedule therefore had to be read
"and" and applied accordingly.
The notice gave three different categories under which the petitioner was
brought to tax. Therefore, it was obvious that the Sindh Revenue Board
("SRB"), which is the authority u
the Act, was itself unsure as
to what applied to the petitioner. It was submitted that in such circumstance
petitioner was not liable to be registered under the Act and could not be
brought to tax in terms thereof.
4. Learned counsel

for the petitioners in C.P. D-3723/2013 (who include the Association of
Builder
Developers of Pakistan (ABAD), the trade body), submitted that in
the course of their business activitie
petitioners sometimes acted as
developers, other times as builders and from time to time as both. Le
counsel submitted that as "builders" the petitioners would buy a plot
or piece of land, raise construction th
(typically a multistorey building
or "project") and sell the units (flats, apartments, shops, offices
or
combination thereof, depending on the nature of the project) therein to
the public. As "developers"
petitioners would typically buy a
piece or tract of land, develop it by creating infrastructure (by way of r
utilities etc) thereon and dividing it into plots and then sell the same to the
public. Learned counsel empha
(and in many ways this was the core of the
case set up by all learned counsel appearing for the petitioners
in all
relevant situations, all that was happening was that immoveable property was
being sold. No ser
whatsoever were being rendered. Thus, the petitioner's
activities were wholly beyond the scope of the Act a
was submitted, even
the legislative competence of the Province insofar it related to the taxing of
services.
regard to the latter submission, learned counsel referred to
various provisions of the Constitution includi
particular Entry No. 49 of
the Fourth Schedule, and the position that emerged after the 18th Amend
whereby the legislative competence to impose a tax on services was shifted
exclusively to the Provi
Learned counsel also referred to a pre-18th
Amendment decision of the Supreme Court, Federation of Pak
and others v.
Haji Muhammad Sadiq and others 2007 PTD 67 = 2007 CLD 1. That decision was
rendered
time when the providing of services was taxed by the Federation
under its competence to impose duti
excise. Learned counsel read various
passages from the judgment and respectfully submitted that it
distinguishable and did not apply in the situation that had come about as a
result of the 18th Amendment, an
facts and circumstances now before the
Court Reliance was also placed on a Division Bench decision o
Court,
Defence Authority Club and others v. Federation of Pakistan and others 2007 PTD
398. Learned co
also referred to the Sindh Building Control Ordinance,
1979 under which the petitioners were registere
purposes of their
business. Reliance was placed, in particular, on the following definitions
contained in cl
(c) and (g) of section 3 thereof:
"(c)
"builder" means a person or body of persons, including a society
engaged in construction
building on contract, or, as owner or agent of the
owner for the purpose of transferring such buildin
hire or by sale or on
the basis of ownership, but does not include a person or persons engaged as
m
or such other artisan";
"(g)
"developer" means a person or body of persons including a society,
engaged in developing a pl
plots for any kind of building activity, for
transfer by allotment to the members if the developer
society, or to other
persons on basis of ownership or by sale".
5. Learned counsel
submitted that insofar as the facts and circumstances of the present case
within the tax net. Was it the rendering of any

services (as contended by the SRB) or (as submitted b
petitioners) merely
a sale of immoveable property? Reliance was placed in this regard on certain
In
decisions. Learned counsel referred to Article 366 of the Indian
Constitution, which contains the va
definitions as used therein
(corresponding to Article 260 of our Constitution) Reference was made to c
(29A) (which was inserted by an amendment made in 1982), which defines
"tax on the sale or purcha
goods". We pause here to note that
under the Indian Constitution, the power to levy a tax on the sale
purchase
of goods is (subject to certain exceptions) exclusive to the States (i.e. the
Provinces) and the pow
levy a tax on services is exclusive to the Union
(i.e., the Federation). In other words, the position in India
reverse of
what prevails under our Constitution after the 18th Amendment. (Reference in
this context may
be made to a Division Bench decision of this Court,
Pakistan International Freight Forwarders Associati
Province of Sindh and
another 2017 PTD 1 where the position in India is explained in para 37.)
Learned co
referred to decisions of both of the Indian Supreme Court and
High Courts to submit that whenever a que
arose as to the taxation of a
contract comprising of elements of a service on the one hand and a sale of
goo
the other, the test applied was that of the dominant purpose. It was
the dominant purpose that determ
whether the contract was taxable (whether
in whole or in respect of its constituent parts) as one of the rend
of
services or the supply of goods. In this regard reliance was also placed on an
American decision (of th
Court of Appeals for the 5th Circuit). Learned
counsel submitted that the question was whether the sa
immoveable property
could ever be regarded as a service? To this, it was submitted, an answer had
to be giv
the negative. To illustrate his point, learned counsel gave the
example of a property dealer who, if the sale o
property went through, was
entitled to a commission. It was submitted that here there were two contracts
was the sale of the immoveable property between the vendor and the vendee.
This did not constitute a ser
and hence, was not within the ambit of the
Act. The other was that between the property dealer and his
(whether the
vendor or vendee or, sometimes, both). The property dealer did provide a
service and therefo
contract could be brought within the ambit of the
Act. (Indeed, the Act contains, in section 2(64D), a defin
of
"property dealer", whose services are brought to tax under tariff
heading No. 9806.2000.) Learned co
submitted that the legislative
competence of tax on services had to be rationally understood and applied
could not conceivably be stretched to include what were nothing other than, and
only, contracts/ transaction
the sale of immoveable property. Learned
counsel referred to various provisions of the Act, and clauses i
definition section, to submit that services that could be brought to tax were
provided in relation to somet
but that that something itself (here
immoveable property) could never be properly the subject of the levy.
6. Learned counsel

appearing in C.P. D-1774/2016 submitted that the charging provisions being
ap
were vague and undefined. Thus, tariff heading No. 9824.0000 simply
said "construction services" and no
more. There was no
classification or elaboration of the services being brought to tax Indeed,
learned co
submitted, that the entries were so vague and there was such an
overlap that they were sought to be ap
together, which was clearly
impermissible. It was also emphasized that although the Act had a spraw
definition section, it did not define "builder",
"developer" or "promoter". Learned counsel submitted that
in
cases notices had been issued to builders who had not even launched
their projects. In other cases, notice
been issued to builders who had not
yet started taking "bookings", although construction had started.
Le
counsel submitted that if at all any tax was payable, it would be at
the time of the sub-lease of the unit being
to a particular person. Yet,
the impugned notices had been issued in haste and much before that time
conceivably have arisen.
7. Learned counsel in

C.P. D-679/2016 submitted that the correct test to apply was that of dominant
pu
as laid down by the Indian courts, and referred to above. It was
submitted that the primary transaction wa
of transfer of immoveable
property. That would come about only when the project was completed and a
installments paid by a given allottee for his unit. It was submitted that the
"service" purported to be taxed
never be provided. Thus. e.g., if
the allottee failed to make payment of all the installments, he would n
entitled
to the property. In such situations, there could be no levy of the tax.

C.P. D-7657/2015 referred to the overall scheme of the Act, and submitted that
were three types of services brought within the ambit of the Second Schedule.
Firstly, there were service
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were specifically and expressly referred to
by name. Secondly, there were services that were5/22 specifie
Referring to sections 3 and 4, learned counsel submitted

that in all cases there had to be a specific se
provider and a recipient
and there had to be conscious transaction of supply of services. For a
transaction
brought within the tax net, it had to be established that
there was a "service" within a specific tariff he
contained in
the Second Schedule, and that the dominant purpose of the transaction was the
providing of the
service. The object had to be to tax the service and not
any product or thing resulting from the service. Refe
to the judgment of
the Supreme Court in Federation of Pakistan and others v. Haji Muhammad Sadiq
and o
2007 PTD 67 = 2007 CLD 1, learned counsel submitted that there the
levy was on services in relation to loa
advances. However, these were
intangibles, which could not be separated from the service itself (which
what was being taxed). As opposed to that, there could be many cases which
involved a tangible in which
the elements of supply of goods could be
ascertained and identified separately from any service being prov
Learned
counsel submitted that in such cases the recipient was invariably more
interested in the end produ
result (which was something tangible) rather
than any element of service as may be involved in the transa
By way of
illustration, the example of a painting was referred to. Learned counsel
submitted that in the situ
at hand, the transaction involved immoveable
property but also carried a strong element of the supply of g
However, it
was only the Federation that could tax the latter. The Act, as sought to be
enforced agains
petitioners, did not draw the necessary distinction. It
was too broadly stated and therefore could not be enfo
at least in the
facts and circumstances of the present ease.

C.P. D-2719/2016 submitted that the tariff headings challenged went far be
levying a tax on "services" and had to be properly read down. It was
submitted that if an activity produ
tangible, then it could not be
regarded as providing a service. The distinction between services on the one
and goods on the other was that of tangibility and perishability. A
service had to be both intangible
perishable. Goods on the other hand were
tangible and (at least in a relative sense) permanent. Learned co
submitted that it was only that which was, holistically, a service that could
be brought to tax under the A
the facts and circumstances of the present case,
there were no objective criteria that could determine what
the service and
the goods components. Learned counsel submitted that in all the tariff headings
that were so
to be applied, there were elements of both service and goods,
which could not be disentangled and hence n
could be levied in the present
circumstances. The case against the petitioners accordingly failed.

C.P. D-807/2016 submitted that the petitioners were involved in the transf
immoveable property and that did not amount to an "economic activity"
within the meaning of section 4 o
Act. It was submitted that if a
transaction did not come within the legislative competence of the federatio
being liable to tax as a supply of goods) that did not mean that it
automatically could be brought to tax und
Act. It was submitted that it
was crucial to keep in mind that the petitioners, as builders or developers
supplied the land itself. That would not be the situation where the land
belonged to someone, and in re
thereof or thereon construction activities
were carried out by the builder or developer. The petitioners
sought to be
taxed in the former and not the latter situations. Learned counsel also
submitted that service
"consumed" when received. The tangibility
of the cases at hand (i.e., the sale of immoveable property) was
that if
completely overshadowed any other element.
11. Learned counsel

appearing for the petitioners in other petitions adopted the arguments and submis
as noted above.
12. The learned AAG,

opening the case for the respondents, submitted there was a presumptio
constitutionality of a statute and the onus lay, on the person claiming that
the impugned statutory provision
unconstitutional to show that this was so.
It was submitted that in respect of their projects the builder
developers
were definitely offering services within the meaning of the Act, which could be
taxed according
was submitted that the projects were publicized through
advertisements and brochures and invariably a
office with a
"model" unit were set up, which could be perused and visited by the
public. The price of a uni
the installments in terms of which it could be
paid were prominently displayed. It was only then tha
interested person
entered into a contract with the builder/developer, and booked a unit as per
his requirem
Development charges were also charged by the
builder/developer in relation to the project. The learned
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submitted that Case as
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presently relevant the services could be divided into two categories: property
performance based services. The cases at hand fell in the former

category. Reliance was placed in particul
the aforementioned judgment of

the Supreme Court. Federation of Pakistan and others v. Haji Muhammad S
and
others 2007 PTD 67 = 2007 CLD 1 and the learned AAG also relied on certain
decisions of the I
Supreme Court. Certain dictionary entries in relation
to the meaning of terms such as "developer", etc. were
relied
upon. It was denied that the tariff headings sought to be applied to the
petitioners under the Act suf
from the vice of vagueness. The
maintainability of the petitions was also challenged inasmuch as it
contended that statutory remedies were available to the petitioners to contest
the show-cause notices. Cas
was also cited in this regard.
13. Learned
departmental counsel for the SRB (Mr. Atifuddin) submitted that the housing and
constru
industries were regarded as falling in the service sector of the
economy. The services included providing
developing the infrastructure such
as laying down roads, sewage lines and systems, boundary walls, providi
security, demarcation and other services of a common nature. Other services
included improving the land
making it fit for purpose, plotting, etc. and
charges were obtained from the allottees for all these activ
Learned
counsel submitted that the petitioners were focusing only on the end result:
i.e., the developed p
constructed unit that was acquired by them.
However, the services provided not merely the end result bu
entire gamut
of activities preceding and leading up to, and culminating in the end result.
Learned co
submitted that there was a difference between a tax on
property, and a tax on services as levied under the
The former was an
annual recurring levy on the property. The latter was a one-time levy, which
was ch
when the services were rendered. It was submitted that the builders
and developers were the providers o
services as aforesaid and therefore
liable to the payment of tax under the Act.
14. Learned counsel

referred to various scenarios that could arise, all of which according to him
were
to tax under various tariff headings. It was submitted that one
possibility was that the builder/ developer bui
property with his own
resources without any actual or potential buyer in sight. The property, once
constru
was then sold. It was submitted that here tariff heading No.
9824.0000 (construction services) would app
second possibility was where
shops, flats, etc. were booked and payment was made in installments. Here
services were being provided and were liable to be taxed. Yet another situation
was where land was deve
and sold by a developer. It was submitted that the
tax was leviable on the services being provided for
development. It was
emphasized that the tax was not on the land, but rather on the services
rendered. Le
counsel submitted that the builders and developers were not
selling any goods at all and the dominant purpo
the activity and the
transaction was clearly and obviously a service. It was denied that the tariff
headings
vague or incapable of resolution in terms of the principles
applicable to the interpretation of a taxing statute
maintainability of
the petitions was also challenged on grounds similar to those taken by the
learned A.
submitting also that the issues raised involved a factual
controversy; which could not be decided in exerc
constitutional
jurisdiction.
15. Learned counsel for

SRB (ML Anwar Mansoor Khan) submitted that the Act was intra vire
Constitution and the levy was squarely on services rendered and not otherwise.
Learned counsel challenge
maintainability of the petitions, submitting
that the show-cause notices should be allowed to go forward
hearing and
determination, which, if adverse to the petitioners could be challenged by them
through approp
statutory remedies. Various provisions of the Act,
including in particular sections 3 and 4 and sections 8
were referred to
and relied upon. It was submitted that the efforts done towards an act as came
within the
of the Second Schedule were the services provided under the
Act. Learned counsel referred to the Firs
Second Schedules to the Act and
elaborated the relationship between and interaction of the two, referring in
regard to the various tariff headings in issue in these cases. Various
decisions were relied upon. As regard
Indian decisions and the rule of
dominant purpose, learned counsel submitted that in a building contrac
aspect of the service of building (i.e., the act of construction) was always,
there although it may manifest its
different ways in different contracts.
However, the essence was the act of construction, which always had
there
and which was the service being provided. It was submitted that the petitions
were liable to be dismiss
16. The right of reply

was exercised by Mr. Farogh Naseem Learned counsel submitted that when the
s
cause notice was patently without jurisdiction, extraneous to the statute
and the questions raised inv
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important 7/22
issues of
interpretation, then the fact that there may be an alternate remedy wa
material and no bar to the petition. The provisions and the tariff headings
were vague and liable to be s
down. It was emphasized that the dominant

purpose of the transaction was indeed the selling of property
nothing else.
17. We have heard

learned counsel as above, considered the record and material referred to and
the cas
relied upon. Before proceeding further two preliminary points may
be made. Firstly, a caveat, It needs to be
in mind that we are here
concerned with immoveable property. The question whether any services are, or
ar
being rendered revolves around this type of property. Now, it is well
known that under the genera
immoveable property is subject to rules that
are sometimes peculiar to it. As will be seen shortly, this aspec
a
material bearing on the outcome of these petitions. This should be kept in mind
at all times.
18. Secondly, we need

to consider in more detail the impugned notices issued to the petitioners, bein
manner in which they are sought to be taxed. Section 8 of the Act provides
in subsection (1) that "there sh
charged, levied and collected a tax
known as sales tax on the value of a taxable service at the rate specified i
Schedule in which the taxable service is listed". Subsection (2)
allows for the tax in respect of any ta
service to be "charged,
levied and collected at such higher or lower rate or rates as may be
specified", by m
of a notification to be issued under the subsection.
On 24.08.2011 Notification No. SRB 3-4/ 2/2011 was i
under section 8(2).
This Notification, as presently relevant, dealt only with tariff heading No.
9807.0000. I
superseded on 01.07.2013 by Notification No. SRB 3-4/8/2013
("Notification"). The Notification dealt wi
three tariff
headings presently relevant, i.e., Nos. 9807.0000. 9814.3000 and 9824.0000. The
first two hea
were put together, and the Notification provided in relation
to all three as under:--
Tariff Description of Rate of tax Conditions and restrictions

Heading services
No.
9807.0000 Services by Property (a) Rs. Input tax credit/ adjustment shall not
and Developers or 100/=
per be
admissible
9814.3000 Promoters for: (a) square yard
development of land; and
purchased or land for (b) Rs. 50/-
conversion into per square
residential or foot of
commercial
plots; constructed
and (b) construction covered area.
of residential or
commercial units
9824.0000 Construction services 4% 1. The persons providing construction
services who do
not elect to be
governed by the Special Procedure,
prescribed by the Board in
relation to
the application of the lower rate as
specified in this
notification, shall not
be entitled to the benefits of this
notification. 2.
Input tax credit/
adjustment shall not be admissible.

(We may note that the rates set out in the notification of 2011 in
relation to tariff heading No. 9807.0000
the same as those set out herein
above for both headings.) An examination of the impugned notices show
the
tax was demanded primarily and essentially in terms of tariff headings Nos. 9807.0000
and 9814.300
applying the rates as set out in the Notification to the
projects being, or to be, constructed or carried out b
petitioners.
Typically, those projects were multi-storeyed buildings comprising either
exclusively of
apartments, Case
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or more of these types of units.
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19. Turning now to the

Act, the first point that needs to be considered is the relationship, if any,
betwee
First and Second Schedules. As already noted, as per section 2(79),
the First Schedule lists, in a non-excl
manner, what is meant by
"services". The tax itself is levied on the services set out in the
Second Sche
While there is, as such, no express linkage between the
Schedules, a reading of the Act as a whole show
there is indeed an
intimate relationship between the two. In our view, the correct approach to
applyin
Schedules is as-follows. The first Schedule should be regarded as
descriptive, i.e., as setting out in general
the nature and scope of the
services brought within the terms of the Act. The Second Schedule on the other
is part of the charging provisions, specifying the services actually
brought to tax. The Second Schedule sh
be regarded as a subset of the First
Schedule. By this we mean that the scope of a tariff heading as given i
Second Schedule cannot go beyond the description as given in the corresponding
entry in the First Sche
However, the manner of interpreting the two
Schedules is different. Being only descriptive in nature the e
in the
First Schedule are to be construed in terms of the principles of interpretation
that apply general
statutes. The Second Schedule on the other hand is to
be interpreted in terms of the special rules that apply t
charging
provisions of a fiscal statute. Another point that needs consideration is how
to deal with an ov
between different tariff headings. In our view, this
question (and if there be any, the degree of the overlap)
be dealt with
by first examining the First Schedule, and interpreting the entries in terms as
just noted. If
concluded that there is an overlap, then the degree
thereof has to be established. Once this has been done
the corresponding
entries in the Second Schedule are to be applied in light of such conclusions,
though of c
now interpreting the entries in the different terms as stated
above. In other words whether there is, or is no
overlap is to be assessed
in terms of the First Schedule; the consequences of a conclusion that there is,
are
addressed in terms of the Second Schedule.
20. Now, the three

tariff headings here relevant, and the manner in which they are given in the
Schedules, have been set out in para 2 above. When tariff headings Nos.
9807.0000 and 9814.3000 as set o
the First Schedule are compared, it will
be seen that they are almost the same, the apparent difference being
heading No. 9807.0000 uses "and" in between "property
developer" and "promoter" whereas heading
9814.3000 uses
"or", (It is not relevant for present purposes to consider whether
the word "property" pre
both "developer" and
"promoter", or only the former.) Is this a substantive difference? In
our view, it is
Since the entries in the First Schedule are descriptive
and are to be interpreted in terms of the princ
generally applicable, the
"and" used in heading No. 9807.0000 should be construed in the sense
of being an
As is obvious, from this conclusion it follows that
the degree of the overlap is complete. Moving to the Se
Schedule to
consider the consequences of this overlap, tariff heading No. 9807.0000 is
clearly more limited
the description given of it in the First Schedule. In
other words, in respect of this tariff heading only a sub
the services
being rendered (if any) are brought to tax, the subset of course comprising of
the two claus
given in the Second Schedule. When tariff heading No.
9814.3000 in the Second Schedule is consider
corresponds to the description
of it as given in the First Schedule, i.e., appears to cover the entire gam
services (if any) provided by property developers or promoters.
Notwithstanding the complete overlap i
description of the headings in the
First Schedule, the entries in the Second Schedule must be applied in term
the principles applicable to fiscal statutes. Taking all of these Factors into
account, in the Second Schedule
heading No. 9814.3000 must be regarded
as being no broader than tariff heading No. 9807.0000 and,
scope, should
not cover any services beyond the latter. It is only in this manner that, given
the complete ov
in the First Schedule, the two can be reconciled in the
Second. If tariff heading No. 9814.3000 were there
given what seems to be
its apparent meaning, then that would render the other, and narrower, heading
otios
reason being that the latter would, be subsumed in the former. But,
since we are now concerned with a cha
provision in a fiscal statute, the interpretation
more favorable to the taxpayer is to be adopted. Clearl
application that
narrows the focus of heading No. 9814.3000 and aligns it with heading No.
9807.0000. is
favorable to the taxpayer. The former must therefore be read
down to the point of coincidence. We may not
this is, at least
implicitly, also recognized by the SRB, inasmuch as the Notification (which of
course rela
the Second Schedule) deals with the services (if any)
rendered under both tariff headings together.
21. The third tariff

heading No. 9824.0000, may now be considered. Since we have concluded that the
is a complete overlap between the other two tariff headings, heading No.
9824.0000 can be compared with
together. Again, the starting point must be
the descriptions as given in the First Schedule. When so consid
at all property dealers or promoters provide

services in relation to immoveable property, "construction" ser
(if provided) would only be a part of the sort of services that they may
provide. On the other hand "constru
services" can be provided by
persons other than property dealers or promoters. (We do not need to consider
the question whether "construction" services can be provided in
relation to immoveable property only an
otherwise: it suffices for present
purposes to consider the heading only in respect of such property.) Give
conclusion that there may be some overlap, the consequences need to be assessed
in terms, and for purpos
the Second Schedule. However, this assessment is
deferred to later in the judgment.
22. We are now in a

position to consider whether the petitioners provide any services within the
meani
the Act, and if so, the nature, scope and extent thereof. As already
noted, the SRB seeks to tax the petition
terms of the Notification. It
therefore suffices to consider the question just posed in the context thereof
an
on any broader plane. It will be convenient to first consider tariff
headings Nos. 9807.0000 and 9814.3000
they can be taken up together. The
question therefore is do the petitioners provide any services in relati
these two tariff headings in respect of either of the two clauses set out in
the Notification? Also as already n
the impugned notices seek to tax the
petitioners in respect of building projects being, or to be, constructe
them, the general nature of which is described in para 18 above. Typically,
whenever a building proje
advertised any person interested in acquiring a
unit (whether shop, flat, office or apartment) "books" the sam
entering into a contract with the developer. The contract can and does, have
many clauses, of which tw
relevant here: (a) the time period within which
the unit is to be handed over, and (b) the total price to be pa
the same,
including especially the installments in which the price is to be paid. Even
more importantly
crucially for present purposes, the legal nature of this
contract under the general law must be kept in mind.
of course, nothing
other than a contract for sale within the meaning of section 54 of the Transfer
of Property
1882 ("1882 Act"), more usually known as an
agreement to sell. Now, it is an essential aspect of such a con
and
indeed section 54 expressly so provides, that it "does not, of itself,
create any interest in or charge on
property being sold. What this
means is well established and requires no elaborate reference to the ease law
position is set out as follows in Mulla on the Transfer of Property Act
(12th (Indian) ed., 2015), the la
Pakistan and India being the same
(internal citations omitted):--
"An
Agreement to sell does not create on interest in the proposed vendee in the
suit property, but
creates an enforceable right in the parties. An
agreement for sale is not the same as 'sale', and the ti
the property
agreed to be sold, still vests in the vendor in case of an agreement for sale,
but in the ca
sale, title of the property vests with the purchaser. An
'agreement for sale' is an executory con
whereas 'sale' is an executed
contract. In all agreements for sale, the two most important cond
would
be the date of payment of price, and date of delivers of possession of the
property...." (pg. 375
"The
law of India does not recognize equitable estates, and the English rule that
the contract make
purchaser owner in equity of the estate, does not
apply.... Section 54 of the TP Act specifically, pro
that the contract of
sale does not, of itself create any interest in or charge on immovable property
w
is subject mailer of contract of sale. A person having an agreement to
sell in his favour does not ge
right in the property, except the right of
litigation on that basis. In the absence of registered sale
nobody can
call himself as owner by purchase on the basis of agreement to sell...."
(pg. 376-7)
"If
the transaction is still in the stage of contract, the buyer, even if he has
paid the price or part o
price and even if he has taken possession, is not
the owner, and the property is still in the seller. How
these
circumstances may give rise to equities in favour of the buyer. A buyer who has
paid the pri
part of the price in anticipation of a conveyance is entitled
under section 55(6)(b) to a charge o
property for the amount paid. If the
contract is still capable of specific performance, the buyer may
suit for
specific performance, and complete his title. If the buyer is in possession in
pursuance o
contract, he is protected from dispossession by the right
enacted in section 53A...." (pg. 379)
23. As is clear from

the above passages, other than the limited circumstances spelt out in sections
53A
55(6)(b) (which are considered below), an agreement to sell creates no
interest in the immoveable prop
Thus, whenCase
file:///C:/Users/user/Desktop/ABAD a person has "booked"
a unit in a building project, that "booking" creates no right or 10/22
Judgment_files/content21.html interest
th
in his favour. He may be entitled to sue the developer for specific
performance of the contract (and may, in
no interest in the property itself. This is a fundamental rule

of the general law in respect of immoveable prop
In our view, the
Notification must be applied in light of this basic rule. It is in this context
therefore tha
consider the two clauses that apply in relation to tariff
headings Nos. 9807.0000 and 9814.3000. Takin
clause (b) first, it can be
stated as follows: "Services by property developers or promoters for
constructi
residential or commercial units". It must be remembered that
the Notification is not issued as an exemption
power being contained in
section 10) but is part of the charging provisions. It is to be construed
accord
While a residential or commercial unit is being constructed the
matter is still at the stage of an agreement to
The question therefore is
this. Can there be provision of services by way of, or for, construction of a
unit, t
person who has "booked" the unit, during the period of
the agreement to sell, i.e., when as a matter of law h
no interest in the
unit? Section 3 of the Act provides that a taxable service must be provided
"in the course
economic activity", and section 4 defines
"economic activity" as meaning "any activity carried on by a
p
that involves or is intended to involve the provision of services to
another person". Here, the activity i
carrying on the construction of
the unit. To come within the scope of the Act, such construction must invol
be intended to involve the provision of services by the developer or builder
to the person who has "booked
unit. But, Such activity is in
respect of immoveable property, More importantly, it is not merely
immoveable property: the nature of the activity is the creation

of the immoveable property itself (the unit a
to be sold). While this
activity is being carried on, as a matter of law the person who has booked the
unit h
interest in the said property. Can it be said in any meaningful
sense that he is being provided services withi
meaning of the Act? In our
view, the answer to this question must be in the negative. It is true that both
sec
3 and 4, in the context of "economic activity", expressly
provide that it includes the "termination" of the act
However,
in our view, this provision does not bring the matter within the ambit of the
tax. When the activity
under consideration is completed (i.e.,
"terminated") the result is the constructed unit that was
"booked"
unit may be complete in all respects. But such completion
still does not, of itself, create any interest there
the person who has
"booked" the same. The stage of the agreement to sell is still not
over. For that to ha
requires another discrete, independent and separate
act transaction, namely the transfer by means of a regis
sale deed.
Therefore, insofar as clause (b) is concerned, the construction of the
residential or commercia
does not, amount to, or involve, any services
being provided by the developer to the person who "booked
unit. This
follows directly and necessarily from the fundamental rule of the general law
applicab
immoveable property, as set out in section 54 of the 1882 Act.
24. We turn to clause

(a). This can be stated as follows:
"Services
by property developers or promoters for development of purchased or leased lan
conversion into residential or commercial plots". In the typical case,
the land in question is of c
purchased or leased by the developer or
promoter, or at any rate by some person other than tho
whom the
residential or commercial plots are to be sold after the
"conversion". Here, the typical situ
could be as described by
one of the learned counsel (see para 4 above). The developer or promoter b
piece or tract of land, develops it by creating, infrastructure (by way of
roads, utilities etc) thereon
dividing it into plots, and then sells the
plots to the public. The services being rendered would have
by way of
developing the land and dividing it into plots. Here, the same point as made in
relati
clause (b) would apply. The contract with the person agreeing to
buy a plot (usually referred to
"allottee") would be an
agreement to sell and section 54 would apply accordingly. It may be th
circumstances to which clause (a) applies the allottee also has to pay
"development' charges t
developer or promoter. However, such payments
(if at all any) would still not overcome the "hu
created by the
rule of the general law applicable to immoveable property. There is no interest
i
property during the period of the agreement to sell, and the entire
"economic activity" that
constitute the provision of services
(including its "termination") falls within the said period.
conclusion with regard to clause (a) would therefore have to be the same as
arrived at in relati
clause (b).
25. Before proceeding

further, sections 53A and 55(6)(b) of the 1882 Act may, be considered. The
form
is well known, applies to a situation where, in part performance of
a contract, the transferee has taken posse
of the property or part
thereof. Since this situation does not appear to exist in the present petitions
and, typi
about this section. Section

55(6) spells out certain rights of the buyer of immoveable property. Claus
provides, inter alia, that unless the buyer, has improperly refused to take
delivery of the property being so
has a charge on the property "for
the amount of any purchase-money properly paid by the buyer in anticip
of
the delivery". Section 100, inter alia, provides in respect of such a
charge that the provisions in respec
simple mortgage shall apply in
relation thereto. Now, as noted above in respect of units "booked" in
a bui
project the price is typically payable in installments (and indeed,
this would also be so where an allottee a
to buy a plot being, or to be,
developed). As the installments are paid, it would seem that section 55(6)(b)
hence section 100, would become applicable thereto. Does this after the
analysis and conclusions arriv
above? In our view, this question should be
answered in the negative. Any charge that may come about wou
for a limited
and specific purpose. It would also operate contingently. In our view, it would
have no bearin
whether any services are being provided by the developer to
the buyer during the stage of the agreement to
Thus, the limited
exceptions that exist under the general law to the fundamental rule contained
in section 5
not have any relevance in the facts and circumstances now
before us.
26. It should also be

kept in mind that the Act is provincial legislation and the 1882 Act is also
withi
legislative competence of the Provincial Assembly. Therefore, if at
all the provincial legislature were so mi
it could have expressly altered
the rule enunciated in section 54, at least for the purposes of applying the
A
respect of the two clauses considered above. However, this has not been
done, the provisions of the
considered above being charging provisions of a
fiscal statute are to be interpreted and applied according
the result is
that the legislature must be regarded as having "missed fire", that
is a consequence that follows
an application of well settled propositions
and principles.
27. It will be
convenient at this stage to consider the decision of the Supreme Court in
respect of w
submissions were made by learned counsel for both the sides.
Federation of Pakistan and others v.
Muhammad Sadiq and others 2007 PTD 67
= 2007 CLD 1. Learned counsel for the petitioners of course s
to
distinguish this case, whereas learned counsel for the respondents relied upon
it to press their point tha
petitioners came within the ambit of the Act.
It will be recalled that at the time this judgment was given
taxation of
the rendering of services was in the Federal domain, being taxed as a duty of
central excise. The
in contention was in the following terms (emphasis
supplied); "Services provided or rendered by ban
companies, financial
institutions, insurance companies, co-operative financing societies, other
lending ban
institutions and other persons dealing in advancing of loans,
in respect of advances made to any per
Although the levy itself was
on the financial institutions (the service providers), they sought to recover
the
from their customers i.e., the borrowers to whom advances were made
and to whom the services were b
provided. The levy was therefore challenged
by the latter. Although many arguments were advance
principal submission
was that no services were being rendered to them, the making of the advances
thems
not being a service. This (and other) submissions were rejected and
the Supreme Court held that service
been rendered within the meaning of
the statute and were liable to be taxed accordingly. In our respectful
the decision of the Supreme Court is distinguishable. In the facts and
circumstances before the Supreme C
the advances made to the borrowers, in
respect of which services were being rendered and brought to
constituted
property in the hands of the service providers (i.e., the financial institutions).
That property
moveable property, being a debt or actionable claim owed by
the borrowers to the financial institutions
property came about as soon as
the loan was advanced. In each case there was a corresponding liability
obligation on the part of the borrower, and this liability also arose and came
about as soon as the property
into existence. Furthermore, no services
were rendered or provided unless such property existed. Thus, all
elements--the service provider, the recipient and the service itself--existed
immediately find simultane
along with the property itself, with
corresponding rights and obligations therein. This position was ther
materially different from the facts and circumstances at hand. Here, it is immoveable
property that is inv
and in the entire course of the "economic
activity" that could constitute the providing of services ("includin
determination" of the activity) the putative recipient--the one who
has "booked" the unit or the allottee o
plot--has by operation
of law no interest in the property. In our respectful view, in the present
facts
circumstances, the decision of the Supreme Court does not render any
support to the respondents' case.
28. Before proceeding
to consider tariff heading No. 9824.0000, which relates to "construction
service
In order to properly
appreciate this case law the position under the Indian Constitution needs to be
set out fi
will be recalled that the Indian Constitution, like the
Government of India Act, 1935 ("GOIA") di
legislative power in
terms of three lists, one exclusive to the Union (i.e., the Federation), the
other exclusi
the States (i.e., the Provinces) and the third shared
between them (i.e., concurrent). In both constitution
power to levy sales
tax on goods vests exclusively in the States: see Schedule 7, List 11, entry
No.48 o
GOIA and Schedule 7, List 11, entry No. 54 of the Indian
Constitution. (This is subject to certain exceptio
the case of the Indian
Constitution but that is not relevant for present purposes.) Entry 54
relevantly
follows: "taxes on the sale and purchase of goods...".
Furthermore, it needs to be noted that under the I
Constitution the
"residuary" legislative power, i.e., those competences, not to be
found in any of the Lists,
exclusively in the Union, and this includes
the power to levy a tax not enumerated in the Seventh Schedule
Article 248
and Schedule 7, List 1, entry No. 97). It is under this power that the Union
imposes tax
services, (A specific entry has been added to List 1 in this
regard, being entry No. 92C ("Taxes on Servic
but apparently it
has not yet been brought into force. However, this does not have any material
effect.)
quite early on the States attempted to impose a sales tax on
works contracts on the ground that such con
included or had an element of
the sale of goods (being the materials being supplied under such contracts)
matter ultimately came before the Supreme Court of India in State of Madras
v. Gannon Dmkerley and Co
1958 SC 560. The Supreme Court held that where
the contract was one and indivisible it could not be divid
legislative
that into a "sale of goods" component and a "works" portion
and that therefore the States coul
impose a sales tax on the former in
such contracts. (We may note that the actual case arose under entry No.
the GOIA, but the position under the Indian Constitution was the same.) This
eventually led to a constitut
amendment (the 46th) in 1982, whereby a new
definition was inserted in Article 366. This is the defin
provision of
the Indian Constitution, and the definition added was of "tax on the sale
or purchase of go
inserted as clause (29A). The definition was
inclusive in form, containing six sub-clauses which dealt
goods
transferred in various types of specific transactions and situations, and which
transfer was expr
deemed to be a sale of goods. For present purposes,
sub-clause (b) is relevant, and clause (29A) can be re
follows: "tax
on the sale or purchase of goods" includes- ... (b) a tax on the transfer
of property in g
(whether as goods or in some other form) involved in the
execution of a works contract; ...". Thu
constitutional device, a
works contract was divisible into two components, one of which related to the
trans
goods and which, being a deemed sale, could therefore be taxed by
the States.
29. When the Indian

cases relied upon are considered, they present, at least from the perspective
o
Constitution and the statutory position under the Act, a rather
complicated picture. Some of the cases inv
immoveable property while
others related to moveable property. In some it was the Union seeking to imp
tax on services and in others it was a State attempting to tax the
"goods" element of a contract that had
components as well. In
many there were lengthy and detailed definitions given in the relevant statute.
M
turned on the specific language used, especially in the definitions. We
intend no disrespect to the assis
provided by learned counsel, but perhaps
to go through each and even case relied upon will unneces
burden this
judgment. Therefore, we consider only certain selected cases, being those that
in our view bri
the fore the position in India, and also consider how, if
at all. It relates to the situation under the Act and i
facts and
circumstances before us.
30. The first case to

consider is K. Raheja Development Corporation v. State of Karnataka AIR 200
2350, (2005) 5 SCC 162 ("Raheja"), a decision relied upon by learned
counsel for the respondents. The rel
facts are set out in para 2 of the
judgment (pg. 2351):--
"The
Appellants carry on the business of real estate development and allied
contracts.... They ente
development Agreements with owners of lands.
Thereafter they get plans sanctioned. After approv
the plans they
construct residential apartments and/or commercial complexes. In most cases
before
construct the residential apartments and/or commercial complexes
they enter into Agreements of
with intended purchasers. The Agreements
would provide that on completion of the constructio
residential apartments
or the commercial complex would be handed over to the purchasers who w
get
an undivided interest in the land also. The owners of the land would then
transfer the owne
file:///C:/Users/user/Desktop/ABAD Case Judgment_files/content21.html
directly to the society which is being formed under the
Karnataka Ownership Flats 13/22 (Regulatio
The appellants were sought to be taxed on their activities under

the Karnataka Sales Tax Act. This h
definition of works contract in the
following terms: "works contract" includes any agreement for carrying
o
cash, deferred payment or other valuable consideration, the building,
construction, manufacture, proces
fabrication, erection, installation,
fitting out, improvement modification, repair or commissioning of
moveable
or immovable property". The Supreme Court observed (pg. 2352) that this
definition was very wi
was not restricted to a works contract as
"commonly understood", which according to the Court mea
contract to do some work on behalf of somebody else". It was also observed
as follows (ibid):--
"To
be also noted that the definition does not lay down that the construction must
be on behalf
owner of the property or that the construction cannot be by
the owner of the property. Thus even
owner of property enters into an
agreement to construct for cash, deferred payment or val
consideration a
building or flats on behalf of anybody else it would be a works contract withi
meaning of the term as used under the said Act."
It was in the foregoing terms that the Supreme Court held as

follows, in passages strongly relied upon by le
counsel for the
respondents (emphasis supplied):--
"16.....
As has been rightly submitted... the definition of the term 'works contract' in
the said Act
inclusive definition. It does not include merely a works
contract as normally understood. It is a
definition which includes
"any agreement" for carrying out building or construction activity
for
deferred payment or other valuable consideration. The definition does
not make a distinction base
who carries on the construction activity. Thus
even an owner of the properly may also be said
carrying on a works
contract if he enters into an agreement to construct for cash, deferred payme
other valuable consideration. We, therefore, do not need to go into the
question whether the Appe
are owners as even if the Appellants are owners
to the extent that they have entered into Agreemen
carry out construction
activity on behalf of somebody else for cash, deferred payment or other
val
consideration, they would be carrying out a works contract and would
become liable to pay turnove
on the transfer of property in the goods
involved in such works contract...." (pp. 2353-4)
"19.
Thus the Appellants are undertaking to build as developers for the prospective
purchaser.
construction/ development is to be on payment of a price in
various installments set out in
Agreement... Of course, under clause 7 they
have right to terminate the Agreement and to dispose o
unit if a breach
is committed by the purchaser. However, merely having such a clause does not
mean
the agreement ceases to be a works contract within the meaning of the
term in the said Act. All tha
means is that if there is a termination and
that particular unit is not resold but retained by the Appel
there would
be no works contract to that extent. But so long as there is no termination the
construct
for and on behalf of purchaser. Therefore, it remains a works
contract within the meaning of the te
defined under the said Act. It must
be clarified that if the agreement is entered into after the flat or u
already constructed, then there would be no works contract. But so long as the
agreement is entered
before the construction is complete it would be a
works contract." (pg. 2355-6)
31. In our view, the

cited case amply demonstrates the difference between the position in India an
position under the Act. The Act contains no definition equivalent to the
definition of "works contract" und
Karnataka statute. As is
clear, the case essentially turned on this broad and encompassing definition.
The I
Supreme Court itself highlighted the difference between a works
contract as "commonly understood", a
used in the statute. It was
the statutory terms that brought about a situation such that even at the stage
o
agreement to sell, the matter came within the terms of the Karnataka
statute. The position under the Act b
us is completely different. This
decision therefore, while illuminating, does not, with respect, provide
assistance in resolving the issues in the facts and circumstances before us.
32. The next case to

consider is a decision of the Gauhati High Court strongly relied upon by
learned co
for the petitioners. Magus Construction (Pvt.) Ltd. and another
v. Union of India and others (2009) 3 GLT
This was a case
file:///C:/Users/user/Desktop/ABAD where the Union
sought to bring the activities of the petitioners to tax as services.
Case Judgment_files/content21.html The
rel
14/22
facts were as follows (para 1: emphasis supplied):--
"Petitioner
No. 1 is a private limited company engaged in the business of development and
sa
immovable properties, i.e., real estates. The petitioner-company
constructs buildings and
premises/flats in such buildings. During the
course of development of such property and constructi
buildings thereon
and also after completion of such construction, the petitioner-company enters
into
purchase agreements" with various premises/flat
purchasers, whereunder the petitioner-company
and sells flat premises,
in such buildings, to the purchasers. The said transaction is a transaction of
s
flats/premises and the consideration is payable to the
petitioner-company in instalments as per the t
which may be mutually
agreed upon, though the terms of the agreement are, usually, co-related t
extent and the stage of the development of the constructional work. The
agreement for sale of such
is stamped as sale of flat premises for the
entire consideration. Before accepting money as adv
payment or deposit out
of the sale price, the petitioner-company enters into an agreement for sale,
w
is registered. The agreement contains various details and price including
area of the flat the price o
flat (the price of common areas and
facilities being shown separately) and various other fac
concerning the
flat, etc. For the purposes of carrying out construction work of the buildings
petitioner-company engages various contractors for obtaining construction
related services to
petitioner-company. Thus, in their various projects,
the petitioners have engaged reputed contractors
petitioners, at times,
engage contractors, who supply Labour. Sometimes, the petitioners carry out
p
the constructional, activities. However, the petitioners carry out such
constructional activitie
themselves and for their own purposes and not for
any one else. The transaction between the petiti
and the flat purchasers
is purely a transaction for sole of the flat/premises and cannot be treated
contract for rendering of service of any nature whatsoever. On certain
occasions, instead of purch
the land from the owners, the petitioners
enter into agreements with the owners of the land,
agreements being
popularly known as "development agreement". Under such agreements,
the petiti
become entitled to construct a building on the land and sell
the flats, which may be constructed the
The petitioners acquire all the
rights, title, interest and advantages of the owners including
entitlement
to sell, transfer, deal with, dispose of all the premises and areas in the building
or struc
to be constructed by the petitioners. The petitioners are given
the right to enter upon the land, to
constructions thereon and sell flats
constructed on such land. Even after execution of such agreem
the
constructional activities, carried out by the petitioners, are mostly through
other persons worki
external contractors. In any case, such constructional
developmental activities are carried out b
petitioners for themselves and
for their own benefits and not for any other entity or person."
The High Court stated the question before it in the following

terms:--
"4.
The moot question, which the present writ petition has raised, is this: whether
the petitioner-com
has been working, as a "service provider", for
those persons with whom the petitioner-company e
into agreements and
constructs flats for the purpose of sale to those with whom such agreement
entered into?"
The Union sought to tax the petitioner's activities as a

"construction of complex" service or a "commerc
industrial
construction service". The former was defined as follows in the statute:--
"construction
of complex" means--
(a). construction

of a new residential complex or a part thereof; or
(b).
completion and finishing services in relation to residential complex such as
glazing, plaste
painting, floor and wall tiling, wall covering and wall
papering, wood and metal joinery and carpe
fencing and railing,
construction of swimming pools, acoustic applications or fittings and other
si
services: or
(c)
repair, alteration, renovation or restoration of, or similar services in
relation to, residential compl
The expression "residential complex" used in the
definition was itself a defined term. "Commercial or indu
"(a) construction of a new building or a civil

structure or a part thereof; or
(b) construction of pipeline or conduit : or
(c) completion and finishing services such

as glazing, plastering, painting, floor and wall tiling
covering and wall
papering, wood and metal joinery and carpentry, fencing and railing,
constructi
swimming pools, acoustic applications or fittings and other
similar services, in relation to buildi
civil structure : or
(d) repair, alteration, renovation or

restoration of, or similar services in relation to, building or
structure, pipeline or conduit, which is--
(i) used, or to

be used, primarily for; or
(ii) occupied, or

to be occupied, primarily with; or
(iii) engaged, or

to be engaged, primarily in,
commerce
or industry, or work intended for commerce or industry, but does not include
such ser
provided in respect of roads, airports, railways, transport
terminals, bridges, runnels and dams;".
The High Court referred to two departmental circulars, one dated

17.09.2004 and the other 01.08.2006 w
were to the effect that where the
builder, promoter or developer undertook construction work "on his
own"
in the case of "estate builders" ("who construct
building/civil structures for themselves (for their own
renting it out or
for selling it subsequently)"), there was no liability under the statute
as no taxable services
being provided. The High Court considered a number
of decisions as to the effect of departmental circ
finally concluding as
follows (emphasis supplied):--
"48.
In the light of what has been laid down in the catena of decisions referred to
above, it becomes
that the circular, dated August 1, 2006,
aforementioned, is binding on the department and this cir
makes it more
than abundantly clear that when a builder, promoter or developer undertakes
constru
activity, for its own self, then, in such cases, in the absence of
relationship of "service provider
"service recipient",
the question of providing "taxable service" to any person by any
other person
not arise at all. In the present case too, the materials
placed by the writ petitioners clearly show th
construction activities,
which the petitioners have been undertaking, are in respect of the petitioners
work and it is only the completed construction work, which is sold by the
petitioner-company t
buyers, who may have made agreements for sale before
the construction had actually started or d
the progress of the
construction activity or at the end or completion of the construction activity.
advance, made by a prospective buyer, or deposit received by the
petitioner-company, is ag
consideration of sale of the flat/building to
such prospective buyer and not for the purpose of obta
"service"
from the petitioner-company."
Finally, we may note that although Raheja was cited before the
High Court, it distinguished the decision bo
the facts and the statute
under which the appellants there were brought to tax. The petition was
accord
allowed.
33. The facts of the

cited case are similar to those at hand, where the present petitioners
undertak
construction of "building projects", which are sought
to be taxed under the Act. However, notwithstanding
apparent similarity,
in our view, and with respect, the cited decision does not provide substantial
assistance.
is because ultimately what proved decisive for the High Court
were the departmental circulars, and espe
the one dated 01.08.2006. Here
of course the department (i.e., the SRB) takes an altogether different view o
position under the Act. The High Court did not, in the circumstances before
it, feel it necessary to conside
detailed and complex statutory
definitions reproduced above. In our view, with respect, it is possible tha
such need arisen, the conclusion could have been different. The statutory
position under the Indian statute o
one hand and the Act on the other is

so materially different that the decision, though interesting, does
provide what might be called actionable assistance.
34. The next case to

consider (and the last one in the present context) is Larsen and Touhro Limited
another v. State of Karnataka and another (2014) 1 SCC 708, a decision
relied upon by learned counsel fo
respondents. The central point in issue
was whether the view taken in Raheja was correct (pg. 722)
judgment
disposed off appeals from the Karnataka and the Bombay High Courts. The
Karnataka statute wa
same as had been before the Court in Raheja. The
facts in the Karnataka appeals were as follows (pg. 723):
"2.
.…The ECC division of Larsen and Toubro (for short. "L&T") is
engaged in property develop
along with the owners of vacant sites. On
19.10.1995, L&T entered into a development agreement
Dinesh Ranka.
owner of the land ... together measuring 34 acres ... for construction of a
multi-stor
apartment complex. The owner was to contribute his land and
L&T was to construct the apart
complex. After development, 25% of the
total space was to belong to the owner and 75% to L&T.
3.
A power of attorney was executed by the owner of the land in favour of L&T
to enable it to neg
and book orders from the prospective purchasers for
allotment of bulit up area. Accordingly,
entered into agreements of
sale with intended purchasers. The agreements provided that on completi
the construction, the apartments would be handed over to the purchasers who
will get an undi
interest in the land also. Sale deeds, thus, were
executed in favour of the intended purchasers by
and the owner."
The challenge

mounted to Raheja was on many grounds, a principal one being that the
definition o
on the sale or purchase of goods," inserted as
Clause (29A) in Article 366 of the Indian Constitution ha
been properly
understood, especially as regards its sub-clause (b) (see para 28 above). The
Supreme C
explained the meaning and effect of the clause as follows (pp.
744-5: emphasis supplied):--
"56.
It is important to ascertain the meaning of sub-clause (b) of clause (29A) of
Article 366 o
Constitution.... The definition of expression "tax on
sale or purchase of the goods" is contained in c
(29A). If the first
part of clause 29A is read with sub-clause (b) along with latter part of this
clau
reads like this: "tax on the sale or purchaser of the
goods" includes a tax on the transfer of proper
goods (whether as
goods or in some other form) involved in the execution of a works contract and
transfer, delivery or supply of any goods shall be deemed to be a sale of
those goods by the p
making the transfer, delivers or supply and a
purchase of those goods by the person to whom
transfer, delivery or supply
is made. The definition of "goods" in clause 12 [of Article 366] is
inclu
It includes all materials, commodities and articles. The expression,
'goods' has a broader meaning
merchandise. Chattels or movables are goods
within the meaning of Clause 12. Sub-clause (b) ref
transfer of property
in goods (whether as goods or in some other form) involved in the execution
works contract. The expression "in some other form" in the bracket
is of utmost significance as by
expression the ordinary understanding of
the term 'goods' has been enlarged by bringing within its
goods in a form
other than goods. Goods in some other form would thus mean goods which have
c
to be chattels or movables or merchandise and become attached or
embedded to earth. In other w
goods which have by incorporation become
part of immovable property are deemed as goods
definition of 'tax on the
sale or purchase of goods' includes a tax on the transfer or property in the g
as goods or which have lost its form as goods and have acquired some other form
involved i
execution of a works contract.
57.
Viewed thus, a transfer of property in goods under clause 29A(b) of Article 366
is deemed to
sale of the goods involved in the execution of a works
contract by the person making the transfer an
purchase of those goods by
the person to whom such transfer is made.
58.
The States have now been conferred with the power to tax indivisible contracts
of works. Thi
beenCase
file:///C:/Users/user/Desktop/ABAD done by enlarging the scope
of "tax on sale or
purchase of goods" wherever it17/22
Judgment_files/content21.html occurs i
Constitution. Accordingly,
the expression "tax on the sale or purchase of goods" in Entry 54 of
List
goods whether as goods or in the form

other than goods involved in the execution of works contract
taxable event
is deemed sale."
The Court also held that the "dominant intention" test,

which has been pressed before us by learned couns
the petitioners, was
not relevant insofar as clause (29A) was concerned, and expressly overruled the
con
view that had been expressed earlier. It was held as follows (pg.
746):--
"60.
Whether contract involved a dominant intention to transfer the property in
goods, in our view,
at all material. It is not necessary to ascertain
what is the dominant intention of the contract. Even
dominant intention
of the contract is not to transfer the property in goods and rather it is the
renderi
service or the ultimate transaction is transfer of immovable
property, then also it is open to the Sta
levy sales tax on the materials
used in such contract if it otherwise has elements of works contract
view
taken by a two-Judge Bench of this Court in Rainbow Colour Lab v. State of M.P.
(2000) 2
385 that the division of the contract after the Forty-sixth
Amendment can be made only if the w
contract involved a dominant intention
to transfer the property in goods and not in contracts wher
transfer of
property takes place as an incident of contract of service is no longer good
law. Rai
Colour Lab has been expressly overruled by a three-Judge Bench in
Associated Cement Companies
v. Commissioner of Customs (2001) 4 SCC
593."
The Court then considered the term "works contract"

appearing in sub-clause (b) of clause (29A) in great d
holding as follows
(pp.755-6):--
"87.
It seems to us (and that is the view taken in some of the decisions) that a
contract may involve
a contract of work and labour and a contract of sale
of goods. In our opinion, the distinction bet
contract for sale of goods
and contract for work (or service) has almost diminished in the matte
composite contract involving both (a contract of work/labour and a contract for
sale for the purpos
Article 366(29A)(b). Now by legal fiction under
Article 366(29A)(b). It is permissible to make
contract divisible by
separating the transfer of property in goods as goods or in some other form
from
contract of work and labour. A transfer of property in goods under
clause 29(A)(b) of Article 3
deemed to be a sale of goods involved in the
execution of a works contract by the person makin
transfer and the
purchase of those goods by the person to whom such transfer is made. For this
re
the traditional decisions which hold that the substance of the contract
must be seen have lost
significance. What was viewed traditionally has to
be now understood in light of the philosoph
Article 366(29A)."
The Court then applied its conclusions and findings to a contract

for the construction of a flat in the follo
terms (pg. 756):--
"88.
The question is: Whether taxing sale of goods in an agreement for sale of flat
which is
constructed by the developer/promoter is permissible under the
Constitution? When the agree
between the promoter/developer and the flat
purchaser is to construct a flat and eventually sell th
with the fraction
of land, it is obvious that such transaction involves the activity of
construction inas
as it is only when the flat is constructed then it can be
conveyed. We, therefore, think that there
reason why such activity of
construction is not covered by the term "works contract". After all,
the
"works contract" is nothing but a contract in which one of
the parties is obliged to undertake
execute works. Such activity of
construction has all the characteristics or elements of works contract
ultimate transaction between the parties may be sale of flat but it cannot be
said that the characterist
works contract are not involved in that
transaction. When the transaction involves the activi
construction, the
factors such as, the flat purchaser has no control over the type and standard
o
material to be used in the construction of building or he does not get
any right to monitor or supervis
construction activity or he has no say in
the designing or lay-out of the building, in our view, are n
much
significance and in any case these factors do not detract the contract being
works contract in
as construction
file:///C:/Users/user/Desktop/ABAD pari is concerned.
Case Judgment_files/content21.html 18/22
89.
For sustaining the levy of tax on the goods deemed to have been sold in
execution of a w
contract, in our opinion, three conditions must be
fulfilled: (i) there must be a works contract, (i
goods should have been
involved in the execution of a works contract, and (iii) the property in
goods must be transferred to a third party either as goods or in some other,
form. In a building contr
any contract to do construction, the, above
three things are fully met. In a contract to build a flat
will
necessarily be a sale of goods element. Works contracts also include building
contracts and ther
without any fear of contradiction it can be stated that
building contracts are species of the works con
90.
Ordinarily in the case of a works contract the property in the goods used in
the construction o
building passes to the owner of the land on which the
building is constructed when the goods
materials used are incorporated in
the building. But there may be contract to the contrary or a statute
provide
otherwise. Therefore, it cannot be said to be an absolute proposition in law
that the ownersh
the goods must pass by way of accretion or exertion to
the owner of the immovable property to w
they are affixed or upon which the
building is built."
The Court also summarized its findings in a series of propositions

set out in para 97 of the judgment (pp.
60). The Court then, after another
elaborate discussion, held that the view taken in Raheja was correct.
35. We have quoted

somewhat extensively from the cited decision to show that the constitutional
and
position in India was, and is, materially different from that
obtaining under the Act. While Letrsen and To
Limited and another v. State
of Karnataka and another (2014) 1 SCC 708 is undoubtedly a case of interes
present purposes that interest must in the end, and with respect, be
regarded as largely academic. But, as w
seen shortly, this is not wholly
so.
36. Turning now to

tariff heading No. 9824.0000, the first point that needs to be considered is
the on
was deferred in para 21 above, namely, given that there is at
least some overlap between this and the othe
headings, what is the
consequence in terms of the Second Schedule? In our view, tariff heading No.
9824
can apply to the construction activities of property developers or
promoters and also to any other pe
However, in respect of property
developers or promoters, if any services could be regarded us
"constru
services" but are rendered in the course of any
activity as would directly and materially be part of the activ
service
under the other two tariff headings then such services would stand excluded
from heading
9824.0000.
37. We now come to the

main question: what sort of services can be regarded as coming within the am
the tariff heading? We begin by noting what ought not to come within its
scope. Any activity in whic
relationship between the service provider and
the recipient is governed by a contract for sale in terms of se
54 of the
1882 Act should not, for reasons already given, constitute a service within the
meaning and sco
the tariff heading. Having considered the matter, in our
view the tariff heading will apply to a situation whe
the activity can be
regarded as a service directly and materially related to the construction of
immov
property as such, and (ii) the activity cannot, more naturally and
properly, be regarded as coming withi
scope of some other tariff heading.
Thus, there are two requirements: condition (i) must be shown to exist
condition (ii) must not be applicable. Furthermore, the last two words
("as such") of condition (i) a
importance. It is possible that
the putative service provider is engaged in an activity that is related t
construction of immoveable property, and that this connection is both direct
and material. However, the ac
may not necessarily be connected "as
such" with the construction, in which case it will not be a service w
the meaning of the tariff heading. It may be useful to make use of an example,
which will help illuminat
foregoing points. Take the case of a person
("owner") who wishes to build a house for himself on his own
The owner would of course be the service recipient. He may engage an architect
to design the house and pr
the construction drawings, etc. The architect
may well be regarded as coming within the scope of conditio
as being
"as such" engaged in an activity that is a service directly and materially
related to the constructi
the house. However, the services of architects
are specifically brought to tax under tariff heading No. 9814.
Therefore,
since condition (ii) would also apply, the services of the architect would not
come within the sco
heading No.Case
file:///C:/Users/user/Desktop/ABAD 9824.0000. Continuing further with the
example, the owner may make purchases of
Judgment_files/content21.html the mat
19/22
that are to go into the
building of the house. To take one instance, he may engage a person to
make/procur
related to the construction

of the house but, unless such person has also been engaged to install the same
i
actual construction of the house, would not be related "as such".
Such a person would only be a suppli
goods. Condition (i) would not
therefore be applicable. The reason is that the actual task of construction
well be entrusted to another person, e.g., a contractor engaged for this
purpose whose obligations and acti
would, inter alia include the
installation of the doors windows and other findings in the house at the
approp
stage of the construction. Now, if a contractor is engaged by the
owner, he would of course amply f
condition (i) and it would prima facie
seem that he is eminently a person to whose services heading
9824.0000 is
applicable. However, even this is not necessarily so, the reason being tariff
heading No. 9814.
which specifically provides as follows:--
"Contractors
of building (including water supply, gas supply and sanitary works), roads and
bri
electrical and mechanical works (including air conditioning),
horticultural works, multi-discipline w
(Including turn-key projects) and
similar other works."
By reason of this specific tariff heading, it could be that

condition (ii) would apply to the contractor and h
heading No. 9824.0000
would be inapplicable.
38. The position of the

contractor (to continue with the example taken) is interesting. He may in
instances be a service provider and in others a service recipient. As a service
provider he may (bu
necessarily so, much depending on the actual facts and
circumstances) come within heading No. 9814.2
However, he may himself also
be a service recipient. For example, he may enter into sub-contracts and
en
e.g., an electrician, plumber, etc, to install the various utilities
and other systems in the construction of the h
as it proceeds. What would
be the position of the activities of such sub-contractors, as service
providers, i
context of heading No. 9824.0000? It may be that some at
least may also come within the ambit of heading
9814.2000 and hence fall
outside the scope of entry No. 9824.0000. However, there may be other
situa
where this is not so. To extend the example further, suppose the
house is completed and occupied by the o
After some time, he decides to
construct a swimming pool. This would be a subsequent, discrete and sep
construction event activity. Suppose the owner engages a contractor for this
purpose and the latter sub-con
the laying and installation of the systems
used in a modern swimming pool to a third party. What would no
the
situation? Here, the activities of the contractor vis-a-vis the owner may well
come within the sco
heading No. 9824.0000 since condition (i) would apply
and condition (ii) would not. The reason the latter w
not apply is that
heading No. 9814.2000 appears to apply to a "building" and works
related thereto, "m
disciplinary works" and "similar other
works". A swimming pool would not seem to it into any of
categories.
Likewise, the activities of the sub-contractor, vis-a-vis the contractor, may
also come withi
scope of entry No. 9824.0000.
39. In addition to the

foregoing, there is another aspect of "construction services" that
must be consider
could be that a construction contract, and activities
associated with it is multi-dimensional in the sense tha
contract may
contain elements that constitute "construction services" and others
that do not. For example
owner may engage the contractor on an omnibus
basis, engaging the latter not only to undertake the a
construction but
also to procure the necessary materials and supplier, etc, required for the
same what wou
the position of such a contractor? Here, for illustrative
purposes only we assume that the contractor doe
come within the scope of
heading No. 9814.2000. i.e., that he could be covered by entry No. 9824.0000
would that be so? Would a contract that contains different elements, some
of which may well fall outsid
scope of "construction services"
nonetheless come within the scope of the tariff heading by reason of
elements that do come within its ambit? Such a situation, by no means uncommon
of exceptional, would,
view, require application of the "dominant
intention" test relied upon by learned counsel for the petitioners
therefore necessary to consider this aspect.
40. It will be recalled

that in Larsen and Toubro Limited and another v. State of Karnatka and another
(2
1 SCC 708, the Indian Supreme Court held that the "dominant
intention" test did not apply to situations w
sub-clause (b) of clause
(29A) of Article 366 is involved (see para 34 above). Now, the Supreme Court
noted (see pg.
file:///C:/Users/user/Desktop/ABAD Case747. para 62), with reference to an earlier decision (BSNL
v. Union of India (2006)20/22
Judgment_files/content21.html 3 SCC 1
the "dominant intention" test
did remain relevant and valid for situations where Article 366(29A)(b) di
relying on the very case just cited. In

our view, if the contract or activity to which heading No. 9824.00
sought
to be applied is multi-dimensional in the sense noted above, then the
"dominant intention" tes
usefully be resorted to in order to
determine whether the nature is such that it can be regarded as the providi
"construction services". It will be recalled that in this context
learned counsel for the petitioners also relied
an American case, a
decision of the Court of Appeals for the 5th Circuit. This is Propulsion
Technologies I
Aitwood Corporation 369 F.3d 896 (2004). It was there held
as follows (relying on a decision of the T
Supreme Court); "In such
hybrid transactions [such as building contracts involving the sale of both
service
materials], the question becomes whether the dominant factor or
essence of the transaction is the sa
materials or of services".
Reference may also be made to a decision of the Court of Appeals for the 8th
Ci
Bunebrake v. Cox 499 F.2d 951 (1974), where multi-dimensional
contracts were referred to as "m
contracts". It was observed that
such contracts were "legion", and it was held as follows: "The
test ... i
whether they are mixed, but, granting than they are mixed,
whether their predominant factor, their thrust,
purpose, reasonably
stated, is the rendition of service, with goods incidentally involved ...or is
a transacti
sale, with labor incidentally involved ...". These
formulations can usefully be applied while determining wh
a
multi-dimensional contract is such that it constitutes the providing of
"construction services".
41. It will be seen

from the foregoing that tariff heading No. 9824.0000 can raise complex issue
questions, and its application may not be as simple and straightforward as
the bare language of the entry
suggest at first sight. The application of
the tariff heading would seem to be quite fact-sensitive, and pe
much more
so than the other two headings with which we are concerned.
42. Keeping all of the

above analysis and discussion in mind, and now examining the impugned notice
orders in the light thereof, we are of the view that the SRB and
departmental authorities have seriously, and
extent fundamentally,
misunderstood and misapplied the Act and, more specifically, the three tariff
hea
here involved. The impugned notices and orders disclose an approach
that is rather simplistic and superf
and in our view clearly runs counter
to the requirements of the statute. Serious errors of law have been mad
fundamental level. No attempt appears to have been made to discover the
specific facts applicable to
petitioner, and to the extent that the facts
are set out at all, the same have not been fully appreciated, or expl
The
impugned notices and orders are not sustainable and cannot therefore be allowed
to stand.
43. Before concluding,

we turn to consider the objection taken as to the maintainability of the
petition
our view, with respect, this objection cannot be sustained. The
issues raised in these petitions are of
impression and go to the very
root of how the First and Second Schedules, which are absolutely fundamen
the operation of the Act, are to be interpreted and applied. Even the three
tariff headings actually involved
presented several knotty issues as to
their proper interpretation and application furthermore, the issues raise
of general application. These matters involving issues and questions of law of
primary importance, are pecu
the province of the Superior Courts. The
petitions are therefore maintainable.
44. In view of the

foregoing, we hereby quash the notices and orders impugned in the petitions and
re
the respondents from taking, or continuing with, any action or
proceedings in terms or in respect the
However, this shall not prevent the
SRB or the departmental authorities from initiating fresh proceedin
taken
action anew in accordance with the Act (if at all such proceedings and/or
action are lawfully sustain
but at all times and in manner only that is
consistent with what has been held and laid down in this judgmen
45. This petition shall

apply to, and dispose off, the following petitions: C.Ps. Nos. D-3723/2013,
5194/
1242/2014, 1912/2014, 252/2014, 725/2014, 7656/2015, 7657/2015,
1080/2016, 1122/2016, 1125/
1483/2016, 1504/2016, 1722/2016, 1759/2016,
1774/2016, 1778/2016, 1902/2016, 2058/2016, 2192/
230/2016, 2321/2016,
2719/2016, 679/2016, 680/2016, 774/2016 and 807/2016.
46. Accordingly, these

petitions are allowed in terms of para 44 above. There will be no order as to
Cost
MH/A-53/Sindh Petitions allowed.


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3/15/22, 7:53 PM Case Judgement

file:///C:/Users/user/Desktop/ABAD Case Judgment_files/content21.html 1/22

[Sindh High Court]

Before Munib Akhtar and

PROVINCE OF SINDH and

(b) Sindh Sales Tax on

Federation of Pakistan and others v. Haji Muhammad Sadiq

Union of India (2006) 3 SCC 1; Propulsion

Dr. Muhammad Farogh Naseem along with Pooja Kalpana,

Anwar Mansoor Khan along with Umaimah Anwar Khan,

MUNIB AKHTAR, J.---(1) By this judgment, we intend

2. Before proceeding to note the submissions made by learned

Tariff First Schedule Second Schedule

3. Learned counsel

4. Learned counsel

within the tax net. Was it the rendering of any

6. Learned counsel

7. Learned counsel in

8. Learned counsel in

Referring to sections 3 and 4, learned counsel submitted

9. Learned counsel in

10. Learned counsel in

11. Learned counsel

12. The learned AAG,

Judgment_files/content21.html 6/22 based

performance based services. The cases at hand fell in the former

the aforementioned judgment of

14. Learned counsel

15. Learned counsel for

16. The right of reply

down. It was emphasized that the dominant

17. We have heard

18. Secondly, we need

Tariff Description of Rate of tax Conditions and restrictions

19. Turning now to the

20. Now, the three

21. The third tariff

at all property dealers or promoters provide

22. We are now in a

23. As is clear from

no interest in the property itself. This is a fundamental rule

immoveable property: the nature of the activity is the creation

24. We turn to clause

25. Before proceeding

about this section. Section

26. It should also be

29. When the Indian

30. The first case to

The appellants were sought to be taxed on their activities under

It was in the foregoing terms that the Supreme Court held as

31. In our view, the

32. The next case to

The High Court stated the question before it in the following

The Union sought to tax the petitioner's activities as a

(a). construction

"(a) construction of a new building or a civil

(b) construction of pipeline or conduit : or

(c) completion and finishing services such

(d) repair, alteration, renovation or

(i) used, or to

(ii) occupied, or

(iii) engaged, or

The High Court referred to two departmental circulars, one dated