2017 (5) TMI 1143 - AT - Service Tax

Real Estate Agent Service/Real Estate Consultant Service - case of appellant is that they did not act as real estate agent or real estate consultant but in fact they have purchased the land and Transferable Development Rights (TDR) and sold the same for a premium/profit - whether the first appellate authority was correct in setting aside the demands raised with interest and also the penalties imposed under the category of real estate agent service? - Held that - Revenue has not come out with contrary evidence to show that the respondent s services would get cover under the definition of real estate agent services or real estate consultant services. The first appellate authority was correct in coming to such a conclusion that the activities as undertaken by the respondent would not fall under the category of real estate agent services or real estate consultant services. A similar/identical issue was before this Bench in the case of Sarjan Realties Ltd. 2014 (7) TMI 933 - CESTAT MUMBAI , where the bench has categorically considered the definition of the Real Estate Agent and the activities undertaken by appellant therein and held that the activities of purchase and sale of the land and the amount received by them, and the difference between purchase price and sale price cannot be held as commission and taxable under real estate agent services. Demand set aside - appeal rejected - decided against Revenue.

Summary

Issues:
- Whether the first appellate authority was correct in setting aside the demands raised with interest and penalties imposed under the category of "real estate agent" service.

Analysis:
The appeal was filed by Revenue against an order-in-appeal dated 12.02.2013, questioning the correctness of setting aside demands and penalties related to "real estate agent" service. The show-cause notice alleged the respondent's activities fell under "real estate agent service" or "real estate consultant service" as per the Finance Act, 1994. The appellant contended they were not acting as real estate agents but were involved in purchasing land and Transferable Development Rights (TDR) for profit. The adjudicating authority upheld the demands and penalties, prompting an appeal. The first appellate authority reviewed the records and agreements, concluding the appellant's activities did not fall under real estate agent services, leading to setting aside of the order-in-original.

The Revenue argued that since the land was in the respondent's name, they did not hold title to the property, and the consideration received could not be termed as sale proceeds. Revenue contended that the respondent's activities were related to the sale of land and could be classified under real estate consultant services if not under real estate agent services. The respondent's counsel cited precedents where similar issues were decided in favor of the assessee, emphasizing that the sale and purchase of land did not constitute real estate agent services.

Upon careful consideration, the Tribunal found the Revenue's appeal lacked merit for multiple reasons. Firstly, the first appellate authority's analysis of the agreements entered into by the respondent revealed transactions related to the sale and purchase of land and TDR, not real estate agent services. The Tribunal cited relevant findings from the appellate authority and noted the absence of evidence supporting the Revenue's claims. The Tribunal upheld the conclusion that the respondent's activities did not fall under real estate agent or consultant services.

Additionally, the Tribunal referenced a previous case where similar issues were addressed, affirming that the activities of purchase and sale of land did not amount to commission taxable under real estate agent services. Relying on authoritative judicial pronouncements, the Tribunal upheld the impugned order as correct and legally sound. Consequently, the appeal was rejected, and the impugned order was upheld.