2011 (7) TMI 784 - AT - Service Tax

Demand - Real Estate Agent - Held that in the matter of administration charges and restoration charges and these do not appear to be liable to tax under the entry for services of a Real Estate Agent - Decided in favor of the assessee by way of direction to deposit Rs. 10 lakhs and the balance is waived

Summary

Issues:
1. Liability to pay service tax on administration, restoration, and transfer charges under the category of "Real Estate Agent."

Analysis:
The case involves the Appellant, engaged in real estate development and selling properties, charging administration, restoration, and transfer fees from clients. The Revenue contends that these charges are subject to service tax as per the "Real Estate Agent" category. The Commissioner upheld the tax demand, leading to the current appeal.

The main argument presented by the Appellant is that administration charges are levied even when properties are registered in the original allottee's name, asserting that at that point, they act on their behalf, not as agents. They argue against taxing these charges under the "Real Estate Agent" category.

Regarding restoration charges, the Appellant explains that these are imposed when an allottee defaults on payments, resulting in allotment cancellation. Upon restoring the allotment, a penalty is applied due to damages from the default. The Appellant argues that this penalty does not constitute a service charge by a real estate agent.

However, the Appellant's stance on transfer charges is less clear, with their counsel likening them to administration charges. The Revenue argues that all charges relate to real estate sales facilitated by the Appellant, justifying tax under the Real Estate Agent services.

Upon deliberation, the Tribunal acknowledges merit in the Appellant's arguments regarding administration and restoration charges, deeming them not taxable under the Real Estate Agent category. Yet, they find the argument for transfer charges less convincing, noting that these charges involve transferring property ownership from defaulters to new buyers through the Appellant.

Given the substantial disputed value of transfer charges, the Tribunal directs the Appellant to deposit a specified amount, granting a waiver for the remaining dues to admit the appeal. A stay on collecting the disputed amount is ordered during the appeal's pendency, with compliance verification scheduled for a later date.