The case of Punjab and Haryana High Court in CHD Developers v. State of Haryana & Ors. (TS-147-HC-2015(P&H)-VAT) where Rule 25 of Haryana VAT Rules was challenged on the premise that levy of VAT on value of land was ultra vires the powers of State Legislature.
Earlier in the Haryana VAT Rules 2003, Rule 25 only provides for deduction on account of labour and other service charges in case of works contractor, and no deduction was available to the developer/builders of Haryana on account of cost of land.
However, on 23rd July, vide notification no. 19/ST-1/H.A.6/2003/S.60/2015, HVAT amendment rules have been issued, and rule 25 has been amended thoroughly. These rules have come up with a retrospective effect from 17/05/2010.
Vide these amended rules, it has been made clear that in case of builder/developer, where land is also transferred along with other property in goods, the deduction of 25% (in case books are not maintained, standard deduction is allowed in place of deducing the actual values of service portion) shall be allowed after deducting the cost of land.
The amended rule 25, also provides methods of determining the cost of land, the summary of the same is provided herewith-
Cost of land shall be highest of the following-
For details, you may refer the Notification no. 19/ST-1/H.A.6/2003/S.60/2015.
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