2018 (4) TMI 115 - AT - Service Tax

Real Estate agency service - amount received as sale consideration - respondent s claim is that such amount is towards the sale of Developmental Rights for the piece of land in Nashik, whereas Revenue has taken the stand that such amount is towards facilitating the sale of the said piece of land, and hence, liable to payment of Service Tax under the category of Real Estate Agent Services. Held that - the consideration received by the respondent is towards sale of Developmental Rights to the land and cannot be considered as commission for real estates agents services - reliance placed in the case of CCE, Nashik vs Viraj Estates Pvt. Ltd. 2017 (5) TMI 1143 - CESTAT MUMBAI , where, relying in the case of Sarjan Realties Ltd. 2014 (7) TMI 933 - CESTAT MUMBAI it was 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. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Dispute over Service Tax demand on consideration received for real estate agent services.
- Interpretation of Development Agreement and Sale Deed.
- Applicability of Service Tax under the category of Real Estate Agent Services.

Analysis:
1. The appeal was filed by Revenue against the dropping of Service Tax demand on an amount received by the respondent for providing real estate agent services. The respondent was involved in a land sale transaction and claimed the amount was for the sale of Developmental Rights, not liable for Service Tax. Revenue argued that the respondent's role constituted real estate agent services, hence taxable.

2. The respondent contended that the transactions involved the purchase and sale of Developmental Rights, not immovable property deals. Citing various case laws, the respondent argued against the liability for Service Tax. The Tribunal examined the agreements and transactions entered into by the respondent, emphasizing the nature of the transactions and the absence of real estate agent services.

3. The Tribunal compared the case with a similar one involving M/s Viraj Estates Pvt Ltd, where no Service Tax liability was established. The Tribunal noted the respondent's similarity to M/s Viraj Estates in the land sale deal. Referring to the findings in the Viraj Estates case, the Tribunal highlighted that the activities undertaken by the respondent did not fall under the category of real estate agent services, as confirmed by the first appellate authority.

4. Relying on the decision in the Viraj Estates case, the Tribunal concluded that the consideration received by the respondent was for the sale of Developmental Rights, not commission for real estate agent services. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the impugned order that found no legal basis for the Service Tax demand. The decision was pronounced in open court on 03.04.2018.