2015 (9) TMI 635 - AT - Service Tax

Waiver of pre deposit - Real Estate Agent Service - land acquired was agricultural land for real estate - Held that - Value of the land is not includible in the assessable value for charging service tax and noted that the appellants failed to give the cost of land and 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. In the absence of data given by the appellants the primary adjudicating authority prima facie felt constrained in granting the deduction of value of the land. Taxability of service - Held That - as per Section 65(97a) the service rendered in relation to agriculture is excluded from the scope of Section 65 (97a) while the service rendered by the appellants was not in relation to agriculture, but was in relation to real estate even if the land (for the sake of argument) was agriculture land. As regards the contention that there was no wilful mis-statement or suppression of fact, this requires a detailed discussion which can be taken up only at the time of final hearing. However, having regard to all these factors and facts and circumstances, 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. Inclusion of the cost of land in the value of real estate agent service for service tax calculation.
2. Classification of the service provided by the appellants under the category of real estate agent service.
3. Allegations of wilful mis-statement/suppression of facts.
4. Exclusion of the value of goods involved during the service in accordance with Notification No. 12/2003-ST.

Analysis:
1. The primary issue in this case revolves around the inclusion of the cost of land in the assessable value for charging service tax. The appellants argued that the cost of land should not be part of the value of real estate agent service, while the demand was confirmed based on a value that included the land cost. The adjudicating authority noted the appellants' failure to provide the cost of land separately, leading to the conclusion that the average cost mentioned by the appellants already included their profit, making it includible in the assessable value.

2. Regarding the classification of the service provided by the appellants, the Tribunal referred to the definition of real estate agent service under the Finance Act. The definition includes any advice, consultancy, or technical assistance related to the design, development, construction, or acquisition of real estate. Despite the land being agricultural, the service provided by the appellants was considered to be related to real estate, falling under the scope of real estate agent service.

3. The appellants also contested the allegations of wilful mis-statement or suppression of facts. The Tribunal acknowledged that a detailed discussion on this matter would be necessary during the final hearing. However, based on the facts and circumstances presented, the Tribunal ordered a pre-deposit of 25% of the service tax liability along with proportionate interest as per the legal requirements. Failure to comply with this pre-deposit would result in the dismissal of the appeal.

4. Lastly, the appellants argued for the exclusion of the value of goods involved during the service under Notification No. 12/2003-ST. The Tribunal did not delve deeply into this aspect in the provided summary, focusing more on the primary issues of land cost inclusion and service classification. The decision primarily emphasized the necessity of pre-deposit to meet statutory requirements and stay the recovery of the remaining liability pending the appeal process.