2014 (3) TMI 439 - AT - Service Tax

Penalty u/s 76, 77 & 78 - Interest u/s 75 - Failure to obtain registration - real estate agent service - Held that - prima-facie in the show cause notice as well as in the adjudication order, the authorities have clearly categorised the conduct of the petitioner in failing to obtain registration; in filing returns; and in remitting service tax on the two transactions adverted to, as inter alia in violation of the provisions of the Act with in intent to evade tax. On a true and fair construction of the provisions of Section 65(88) read with Section 65(105)(v) of the Act, prima-facie, we find no justification for any bonafide misapprehension on the part of the petitioner, as to the scope of the contours and trajectory of the definition of the expression real estate agent nor any cause for a misconception that the transaction falls outside the purview of this taxable service - Conditional stay granted.

Issues:
- Confirmation of service tax and penalties under various sections of the Finance Act, 1994
- Allegation of failure to obtain registration, file returns, and remit service tax for real estate agent services
- Interpretation of transactions as taxable services under Section 65(88) and Section 65(105)(v) of the Act
- Defense against providing real estate agency service
- Consideration of conduct for tax evasion
- Granting waiver of pre-deposit and stay of further proceedings

Confirmation of Service Tax and Penalties:
The adjudication order confirmed a service tax amount along with interest and penalties under sections 75, 77, 78 of the Finance Act, 1994. The penalties were imposed for failure to obtain registration, file returns, and remit service tax for real estate agent services as defined under the Act. The petitioner's appeal against this order was rejected by the Commissioner (Appeals), leading to the initiation of proceedings based on a show cause notice.

Interpretation of Transactions as Taxable Services:
The dispute revolved around two transactions involving the petitioner acting as an intermediary in real estate deals. The revenue alleged that the profits earned by the petitioner from these transactions constituted gross consideration for providing taxable real estate services. The petitioner argued that these were mere sale and purchase transactions, not falling under the definition of real estate agency services. However, this defense was not accepted by the adjudicating authority, leading to the confirmation of the service tax demand.

Defense Against Providing Real Estate Agency Service:
The petitioner contended that the transactions were sales and purchases of properties, not real estate agency services. Despite this defense, the authorities categorized the petitioner's conduct as a violation of the Act with the intent to evade tax. The authorities found no justification for the petitioner's misapprehension regarding the scope of the definition of "real estate agent" and the taxable nature of the services provided.

Consideration of Conduct for Tax Evasion:
The authorities highlighted the petitioner's failure to obtain registration, file returns, and remit service tax on the transactions as intentional violations with the intent to evade tax. The provisions of Section 65(88) and Section 65(105)(v) were construed to show that the petitioner's actions fell within the purview of taxable real estate services, indicating a lack of bona fide misunderstanding on the petitioner's part.

Granting Waiver of Pre-Deposit and Stay of Proceedings:
In the stay application, the petitioner's counsel reiterated unsuccessful contentions made before lower authorities. The Tribunal, while not granting absolute waiver of pre-deposit, decided to stay further proceedings for the realization of the adjudicated liability. The petitioner was required to remit the assessed service tax amount with interest within a specified period, failing which the appeal would stand rejected for non-compliance.

Overall, the judgment upheld the confirmation of service tax and penalties, rejected the defense against providing real estate agency services, and granted a conditional waiver of pre-deposit with a stay on further proceedings.

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