2016 (1) TMI 848 - AT - Service Tax

Extended period of limitation - Valuation - Real Estate Agent services - inclusion of administrative charges/transfer charges recovered by it from its clients - bonafide belief - Held that - It is seen that the primary adjudicating authority in the impugned order has clearly noted that the appellant undoubtedly accounted for all the transactions in the statutory records. But the primary adjudicating authority held that the appellant was guilty of wilful misstatement/suppression of facts with intention to evade service tax as it never approached the Department to ascertain the details of their liability to pay service tax and the evasion would have gone undetected but for the investigation by the Department. In this regard it is pertinent to mention that in case of a bona fide belief about the non-taxability of certain transactions, the appellant would not approach Revenue for any clarification because clarification is sought only when there is some confusion/doubt. Matter remanded back - Extended period in this case is not invocable and therefore penalty under Section 78 ibid is also not sustainable - The appellant is eligible for the cum tax benefit. - Decided partly in favor of appellant.

Summary

Issues:
1. Liability of service tax on administrative/transfer charges by a real estate agent.
2. Whether the extended period for invoking penalty is applicable.
3. Eligibility of the appellant for cum tax benefit.

Analysis:
1. The judgment dealt with the liability of service tax on administrative/transfer charges by a real estate agent. The appellant contended that these charges were not related to real estate transactions and thus not liable to service tax. However, the Department Representative argued that as a registered real estate agent, the appellant provided services related to real estate, making the charges includible in the assessable value for service tax under 'Real Estate Agent' service. The tribunal found that the charges were indeed for services in relation to real estate, falling under the purview of 'Real Estate Agent' service.

2. Regarding the applicability of the extended period for invoking penalty, the appellant claimed a bona fide belief that the charges were not taxable. The tribunal noted that the appellant maintained statutory records but held that there was a wilful misstatement/suppression of facts to evade service tax. Citing legal precedents, the tribunal emphasized that a bona fide belief could negate the need for approaching the Revenue for clarification. Ultimately, the tribunal found that the extended period was not invocable, leading to the non-sustainability of the penalty under Section 78.

3. The judgment addressed the appellant's eligibility for cum tax benefit. The tribunal determined that the appellant could benefit from the cum tax provision based on the circumstances and relevant legal provisions. Consequently, the tribunal allowed the appeal, remanding the case to the primary adjudicating authority for re-computation of the demand and penalties. The appellant was granted an opportunity to be heard during the de novo adjudication process.