KVAT turnover Methodology cannot be Followed without Documents Showing Actual Land Value: Kerala HC\r\n\r\n

The Kerala High Court has ruled that without documents showing the actual land value, the standard methodology for calculating total turnover under the Kerala Value Added Tax (KVAT) Rules cannot be applied. DLF Home Developers, a company selling fully constructed flats as part of residential projects, found itself in a tax dispute. They provided materials like steel and cement to contractors for free, believing they were only selling apartments and not liable for tax on work contracts under the KVAT Act. \r

However, the assessing authority treated their transactions as works contracts and levied VAT. The Tribunal upheld this decision, leading DLF to challenge the ruling. They argued that without a specific rule allowing the exclusion of land value from total turnover, taxing apartment sales as works contracts was unenforceable. The court acknowledged the lack of documents showing the land value but upheld the Tribunal's orders, directing it to recalculate the taxable turnover within six months.