2016 (3) TMI 136 - AT - Service Tax

Real Estate Agent Service - Whether services rendered by appellant comes under ambit of Real Estate Agent Service - Appellant was providing service of facilitating the purchase of land - Held that as per the MoU entered into by the appellant on 2-12-2005 shows that the services rendered thereunder falls within the scope of Real Estate Agent service and there was no scope for any ambiguity or confusion which could have created any doubt in the mind of the appellant about the taxability of the service rendered. - Decided against the appellant

Summary

Issues:
1. Appeal against service tax demand under 'Real Estate Agent' service and 'Site Formation and Clearance, Excavation and Earthmoving and Demolition' service.
2. Interpretation of the Memorandum of Understanding (MoU) in relation to the services provided.
3. Determination of whether the services rendered fall within the scope of 'Real Estate Agent' service as per the definitions under Section 65(88) and Section 65(89) of the Finance Act, 1994.
4. Decision on the pre-deposit of the entire impugned service tax liability along with interest and penalties.
5. Stay of recovery of penalty during the pendency of the appeal and consequences of default in compliance.

Analysis:
The appellant filed a stay application and appeal against the Order-in-Appeal confirming a service tax demand under 'Real Estate Agent' service and 'Site Formation and Clearance, Excavation and Earthmoving and Demolition' service. The appellant contested only the component of the demand under 'Real Estate Agent' service, claiming that the services provided did not fall under that category as they facilitated the purchase of land and were not a real estate agent. However, upon examining the Memorandum of Understanding (MoU) with M/s. Sahara India, it was found that the services rendered clearly fell within the scope of 'Real Estate Agent' service as defined in Section 65(88) and Section 65(89) of the Finance Act, 1994. The MoU demonstrated that the appellant provided services related to the sale and purchase of real estate, leaving no room for ambiguity. Consequently, the Revenue was deemed to have a strong prima facie case, leading to an order for the pre-deposit of the entire impugned service tax liability along with interest within eight weeks.

The Tribunal highlighted that the appellant's services, as per the MoU, encompassed activities falling under the definition of 'Real Estate Agent' service, and there was no basis for the appellant's belief that they did not fall under this category. The Tribunal emphasized the clear language of the MoU and the definitions provided in the Finance Act, reinforcing the taxability of the services rendered. As a result, the Tribunal ordered the pre-deposit of the service tax liability, emphasizing the importance of compliance and setting a deadline for reporting such compliance.

In consideration of the appellant's arguments and the definitions outlined in the Finance Act, the Tribunal concluded that the services provided by the appellant were unmistakably within the realm of 'Real Estate Agent' service. The Tribunal's decision to order pre-deposit of the service tax liability was based on the unequivocal nature of the services rendered, as evidenced by the terms of the MoU. The Tribunal's ruling underscored the significance of adhering to tax regulations and the need for clear understanding and classification of services to avoid disputes and ensure compliance with tax laws.