The Appellate Tribunal has barred the Punjab Revenue Authority (PRA) from levying sales tax on developed plots, disallowing imposition of levy on already crowded and controversial sector while holding as not taxable service its selling.
The tribunal struck down PRA’s demand of a Rs. 100 per square yard sales tax, ruling that provinces can only tax services not levies on the sale of immovable property.
The case turned on whether a landowner who develops his own land — constructing roads, laying utilities and infrastructure –and then makes plots available by means of registered sale deeds can be treated at all as a “service provider.”
The tribunal said no, however — because the predominant characteristic of the sale is transferring land, and that’s a federal area, so you can’t tax it as though it were a service.
All PRA orders, including assessment of taxes, surcharge and penalty are stayed.
The move is being presented as a major sigh of relief to developers, housing societies and plot buyers in Punjab as it lifts what was considered a major burden by the real estate industry.
