2018 (12) TMI 1036 - AT - Service Tax

Classification of services - real estate agent services or not? - whether the assessee is liable to pay service tax on the developmental charges received for the service rendered as Real Estate Agent to the members of the Society? Held that - The appellant was indeed the seller of the housing plots to the members of the Co-operative society and had only received the sale consideration for the same without receiving any commission as Real Estate Agent thereof. Moreover, the developmental activities carried out by them would only be intended to fetch higher price for land and in any case, did not involve services to third parties - In any case, the appellant has sold the lands to the Co-operative Society at the rate of ₹ 136.36 per sqft. the same being the fixed rate of land by the statutory body. It is not the case of the Revenue that there was any extra payment/receipt as commission, which is not booked or that there was any cash transaction (on-money) involved over and above the booked amount - the appellant cannot be considered as Real Estate Agent for an amount not received since they have only acted as a seller of the said land by virtue of Power of Attorney. The demand made under Real Estate Agent Service is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax on developmental charges received for services rendered as a Real Estate Agent.

Analysis:
The appeal was filed against the Order-in-Appeal by the Commissioner of Central Excise, Chennai, concerning a partnership firm engaged in Real Estate Agent Services. The firm had entered into a sale agreement with a building society, and it was found that developmental activities undertaken by the firm could fall under Real Estate Agent Services. A Show Cause Notice was issued proposing service tax liability, interest, and penalties. The Order-in-Original confirmed the demand, which was upheld by the Commissioner (Appeals). The appellant contended that the developmental charges were part of the sale consideration and not subject to service tax. The appellant argued that the transaction was a simple sale and purchase of land without services to third parties. The appellant also claimed the demand was time-barred. Various judgments were cited in support of these contentions.

The Advocate for the appellant argued that the firm was the seller of housing plots to the society members and did not act as a Real Estate Agent. The developmental activities were aimed at increasing the land's value for sale without providing services to third parties. The agreement between the parties and the pricing details were presented to support this argument. The appellant also claimed that the demand was beyond the limitation period. On the contrary, the Department supported the lower authorities' findings.

After considering the arguments and judgments cited, the Tribunal found that the appellant was the seller of the land to the society members and did not act as a Real Estate Agent. The developmental activities were geared towards increasing the land's value, and there was no service provided to third parties. The Tribunal noted that the appellant sold the land at a fixed rate determined by the statutory body without any additional commission or cash transactions. Therefore, the demand for service tax under Real Estate Agent Services was deemed unjustified. The impugned order was set aside, and the appeal was allowed with consequential benefits, if any, as per law.