2015 (3) TMI 1108 - AT - Service Tax

Waiver of pre deposit - levelling of soil including filling of gorges/nallah, etc - value of the goods involved is also excludible in terms of Notification No. 12/2003-ST - Held that - The adjudicating authority further noted that the average cost of land mentioned by the appellants was inclusive of the profit of the appellants which was includible in the assessable value. Thus when the appellants failed to provide the evidence of the value of land, the adjudicating authority felt constrained not to deduct the value thereof. Similarly, it was for the appellants to provide evidence required for the benefit of notification No. 12/2003 - development of agriculture land is outside the purview of service tax, it is to be noted that service provided in relation to agriculture is excluded from the purview of Section 65(97a) ibid, but in the present case land was (being) developed for real estate and therefore it was a service provided in relation to real estate and not in relation to agriculture (even if for the sake of argument, the land is held to be agricultural land). - issues of classification and valuation also need to be analysed at the time of final hearing, we are of the view that pre-deposit of 25% of the impugned service tax liability with proportionate interest would meet the requirement of Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Partial stay granted.

Summary

Issues:
1. Whether the demand of service tax along with interest and penalties for a specific period is justified.
2. Whether the value of land should be included in the assessable value for charging service tax.
3. Whether the service provided falls under the category of Real Estate Agent service.
4. Whether the development of agricultural land for real estate purposes is subject to service tax.
5. Whether there was wilful misstatement or suppression of facts in the case.

Analysis:
1. The appeal was filed against a service tax demand confirmed for a particular period. The appellants had engaged in a project with another company but did not pay service tax as per the agreement. The demand was confirmed under the category of Real Estate Agent service. The appellants argued against the inclusion of land cost in the value for service tax calculation and claimed that their service did not fall under the said category. They also contended that the demand was time-barred due to no wilful misstatement/suppression of facts.

2. The adjudicating authority noted that the appellants failed to provide evidence of the cost of land separately, and the average cost mentioned included their profit, making it includible in the assessable value. The authority also stated that evidence required for the benefit of a specific notification was not provided by the appellants. The definition of Real Estate Agent service includes providing advice or consultancy related to real estate development, which covered the service provided by the appellants. Even if the land was agricultural, developing it for real estate purposes fell under real estate services, not agriculture.

3. The contention of wilful misstatement or suppression of facts and the request for additional evidence were deferred for the final hearing. Considering the classification and valuation issues, the Tribunal ordered a pre-deposit of 25% of the service tax liability with interest. Compliance was required within a specified period, failing which the appeal would be dismissed. The recovery of the remaining liability was stayed pending the appeal upon compliance.

This detailed analysis of the judgment provides insights into the various issues raised, including the justification of service tax demand, inclusion of land value, classification of services, applicability of service tax to agricultural land development, and the requirement for pre-deposit pending appeal.