2018 (2) TMI 1260 - AT - Service Tax

Classification of services - Administrative Charges - Revenue entertained a view that such Administrative Charges are liable to be taxed under the category of Real Estate Agent service - Held that - similar dispute came up before the Tribunal on earlier occasions also including in the case of appellant s sister concern Ansal Housing Construction Ltd. vs. CST, New Delhi 2017 (11) TMI 546 - CESTAT NEW DELHI where it was held that the appellant are not liable to service tax under Real Estate Agent service - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax liability under the category of "Real Estate Agent" services for administrative charges.
2. Interpretation of the conditions in the allotment agreement regarding transfer of rights and incumbrance.
3. Comparison of decisions in similar cases regarding tax liability under "Real Estate Agent" service.
4. Examination of the nature of activities and transactions to determine tax liability.

Analysis:

Issue 1: Service tax liability under the category of "Real Estate Agent" services for administrative charges.
The appellant was involved in the development of commercial/residential buildings and faced a service tax liability for administrative charges related to changes in property rights. The Revenue contended that these charges fell under the "Real Estate Agent" service category. The appellant disputed this liability, leading to the appeal.

Issue 2: Interpretation of the conditions in the allotment agreement regarding transfer of rights and incumbrance.
The appellant argued that the administrative charges were an extended consideration as per the terms of the allotment agreement, specifically for changing property rights. The agreement stipulated conditions for transfer or incumbrance of rights, requiring prior consent and payment of administrative charges. The Tribunal analyzed the agreement and related documents to determine the nature of these charges.

Issue 3: Comparison of decisions in similar cases regarding tax liability under "Real Estate Agent" service.
The Tribunal referred to previous cases, including one involving the appellant's sister concern, where it was held that the appellant was not liable for service tax under the "Real Estate Agent" service. This comparison was crucial in establishing a consistent approach to such disputes and determining the applicability of tax liability based on past judgments.

Issue 4: Examination of the nature of activities and transactions to determine tax liability.
After examining the facts of the case and the agreements involved, the Tribunal concluded that the appellant was not engaged in "Real Estate Agent" services. The transactions primarily involved interactions between the appellant and buyers, with the third party involvement occurring only during transfers of property rights. The Tribunal's analysis focused on the fundamental nature of the transactions to decide on the tax liability issue.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant. Additionally, another appeal was remanded to the Commissioner (Appeals) for further examination without insisting on a mandatory pre-deposit, aligning with the similar issue decided in the main appeal.