Prime Location Charges/Floor Rise Charges would not be included in Taxable Service under VAT

Last updated: 07 October 2023

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Quick Summary

The Karnataka High Court has ruled that Prime Location Charges (PLC) and Floor Rise Charges (FRC) are not part of taxable services under the Karnataka Value Added Tax (KVAT) Act. The court determined that these charges, paid by buyers for preferential locations or higher floors, fall under the definition of service tax, not works contract. Therefore, VAT is not applicable to these specific charges.

Court :
Karnataka High Court

Brief :
The Hon'ble Karnataka High Court in the case M/s. Smart Value Homes (Peenya Projects) Private Limited vs. Joint Commissioner, Commercial Taxes (Appeals) and Others [S.T.R.P No. 47 of 2022 dated August 23, 2023] allowed the revision petition and held that the Prime Location Charges ("PLC")/ Floor Rise Charges ("FRC") would not fall within the definition of works contract under the Karnataka Value Added Tax Act, 2003 ("the KVAT Act") and such charges incurred by the buyer would fall within the purview of Service Tax.

Citation :
S.T.R.P No. 47 of 2022 dated August 23, 2023

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