2010 (4) TMI 669 - AT - Service Tax

Waiver of pre-deposit Real Estate Agent service appellant purchasing flats under construction and periodically pay the consideration sold the flats to other parties identified on their own - consideration is not received towards any service rendered by the appellants as real estate agent Held that contentions not satisfied as to no levy of Service tax the nature of the service provided in view of the service provided by the appellants in relation to real estate waiver partly allowed

Summary

Issues:
1. Stay applications for Service tax demand and penalties.
2. Interpretation of real estate agent service under Section 65(105)(v) of the Finance Act, 1994.
3. Adjudication authority's decision on the levy of Service tax.
4. Granting of waiver of pre-deposit and stay of realization of balance demand.

Analysis:

1. The appellant filed two stay applications concerning Service tax demands and penalties. The first application, ST/3194/2009, sought a stay for a demand of Rs. 6,86,467 and an equal penalty under Section 78 of the Finance Act, 1994. The second application, No. 3193/09, requested a stay for a demand of Rs. 69,51,824, a penalty of Rs. 1000 under Section 77, and a penalty of Rs. 69,51,824 under Section 78 of the Finance Act, 1994.

2. The appellant argued that they do not provide real estate agent services as defined by Section 65(105)(v) of the Finance Act, 1994. They contended that their activities involve real estate development, land purchase, and building construction, not acting as real estate agents. The appellant maintained records of buyers for various purposes related to property ownership, rights, or divestment, which they claimed did not constitute real estate services. The appellant relied on a decision in the case of Puravankara Projects Ltd. v. CST, Bangalore to support their position.

3. The Revenue, represented by the DR, asserted that the appellant's services fell under the purview of Section 65(105)(v) read with Section 65(88) of the Finance Act, 1994. The adjudicating authority had examined the appellant thoroughly, provided a fair hearing, and levied Service tax based on the services provided by the appellant.

4. After hearing both sides and considering the interim order from the Bangalore Bench, the Tribunal was not convinced that there should be no levy of Service tax on the nature of services provided by the appellant in relation to real estate. Consequently, the Tribunal directed the appellant to make a pre-deposit of Rs. 10 lakhs within four weeks and report compliance by a specified date. The Tribunal also stayed the realization of the balance demand pending the disposal of the appeals.