2019 (9) TMI 1529 - AT - Service Tax

Refund of Service Tax - Renting of Immovable Property service - Real Estate Agent service - transfer charges - HELD THAT - The demand of transfer charges was actually set aside when it was demanded under real estate agent services. The only amount of transfer charges demand which was confirmed was pertaining to the period w.e.f. 1st July 2010 onwards that too when it was demanded under renting of immovable property services. The demand for which the sanctioned refund has been adjusted is qua the transfer charges which were demanded for the period w.e.f. December 2009 to March 2010 and from April 2010 to June 2010 respectively which means that the period in issue is before July 2010. The entire demand of transfer charges as demanded under real estate agent services before July 2010 has already been set aside by this Tribunal the question of adjustment of the refund of an amount as was deposited at the time of filing the said appeal for the demand of the said period is apparently not sustainable. The Commissioner (Appeals) has relied upon the fact that the appeal was partially allowed but has failed to appreciate that while being partially allowed it is the amount in question i.e the transfer charges that too for the period before July 2010 that the said demand was set aside - Commissioner (Appeals) has also committed an error while holding that demand for the period prior to July 2010 was confirmed with respect to the transfer charges. The Commissioner (Appeals) has failed to appreciate the findings of this Tribunal in true spirit and has committed an error while holding the status of partially allowed appeal which was qua other demands than transfer charges as a ground to reject the claim of the appellant for not adjusting the refund qua a demand - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Determination of service tax liability on transfer charges collected by the appellants.
2. Adjustment of sanctioned refund against confirmed demands for transfer charges.

Analysis:

Issue 1: Determination of service tax liability on transfer charges collected by the appellants
The appellants were engaged in providing Management, Maintenance, or Repair Services and were found collecting transfer charges categorized as Real Estate Agent/Real Estate Consultant Services. The Central Excise Commissionerate issued show cause notices proposing the recovery of Service Tax amounts along with penalties for the transfer charges collected. The Order-in-Original confirmed the demands, which were later partly set aside by the Tribunal. The appellants were subsequently held entitled to a refund, but the refund amount was ordered to be adjusted against the confirmed demands. The appellants contended that the transfer charges were wrongly made adjustable as the Tribunal had set aside the demand related to these charges. The Department argued that since the Tribunal had only partially allowed the appeal, the demand was not entirely set aside, justifying the adjustment of the refund.

Issue 2: Adjustment of sanctioned refund against confirmed demands for transfer charges
The Tribunal had previously decided that the transfer charges collected by the appellants could not be subjected to service tax liability under the category of real estate agent services. The Tribunal clarified that the appellants were not acting as agents but were dealing with allottees on a principal-to-principal basis, thus liable to be taxed under the category of renting of immovable property services. The demand for transfer charges was set aside for the period starting from July 2010 onwards when demanded under renting of immovable property services. However, the impugned Order-in-Original sought to adjust the refund against demands for transfer charges from a period before July 2010, which had already been set aside by the Tribunal. The Commissioner (Appeals) erred in not recognizing the specific findings of the Tribunal and wrongly held that the demand for the period before July 2010 was confirmed, leading to the rejection of the appellant's claim for not adjusting the refund.

In conclusion, the Tribunal held that the Commissioner (Appeals) failed to appreciate the Tribunal's findings and committed an error in rejecting the appellant's claim for adjusting the refund against demands that were actually set aside. The Tribunal set aside the Order-in-Original, allowing both appeals and directing consequential relief to follow.