2023 (10) TMI 599 - AT - Service Tax

Taxability - real estate agent service - assignment fee / nomination fee received by them for causing the sale of land to JC as a real estate agent service - Consulting Engineer Service - managing the construction of a project belonging to M/s Golden Constructions - Penalty - service tax on GTA service paid before issuance of SCN - interest amount is to be quantified and paid - Extended period of limitation - Penalty u/s 77 and 78 of FA. Taxability - real estate agent service - assignment fee / nomination fee received by them for causing the sale of land to JC as a real estate agent service - HELD THAT - The true meaning of the phrase assignment/ nomination fee for causing the sale of land by JRBS in favour of M/s JC, is the payment of agent fee/ commission to the appellant by the buyer for facilitating the sale of land. The appellant has thus rendered active service in relation to sale of land to JC and is hence covered under the real estate agent service. The whole activity as it unfolds above shows that the appellant deliberately tried to suppress information and build up an alternate story just to evade payment of service tax. They are hence liable to pay duty and interest as per the extended time limit evoked by the impugned order. The imposition of penalty will be examined separately. Consulting Engineer Service - managing the construction of a project belonging to M/s Golden Constructions - HELD THAT - The appellants activities as stated by them are in the nature of support services of business or commerce and are taxable accordingly. No consultancy or advice was rendered. Even during the recording of statement from the appellant on 26/08/2009 the department Superintendent had as per question 19 referred to the supervision of construction activity and management of the project being classifiable under Business Support Service w.e.f. 01/05/2006. The impugned order is based on assumptions and presumptions, only because the appellant charged management fee of Rs 85/- per square feet. The mode of payment cannot be determinative of the service rendered. No attempt was made to unearth the actual activities rendered by the appellant as a consultant engineer before making the allegations - Duty needs be paid/ collected to the extent as required under support services of business or commerce . Interest is to be quantified and is pending payment. The imposition of penalty in this regard does not survive. Penalty - service tax on GTA service paid before issuance of SCN - interest amount is to be quantified and paid - HELD THAT - The impugned order does not disclose suppression of fact with intention to evade duty as far as GTA service is concerned. It is found that the proceedings would stand concluded in terms of sub-section (3) of section 73 of the Finance Act, 1994 when there is no suppression, fraud etc. involved and the duty and interest have both been paid before issue of SCN. Since interest has not been paid the condition does not stand fulfilled. However, in the circumstances no further penalty need be paid in this regard. Extended period of limitation - HELD THAT - The appellant states that there was no mens rea on their part in evading duty. They cannot be alleged to have suppressed the facts with intention to evade tax. Hence the extended period for issue of SCN cannot be invoked and no penalty can be imposed. Penalty u/s 77 and 78 of FA - HELD THAT - Suppression with intention to evade payment of duty has been established in this case, hence the appellant is liable to pay the statutory penalty as per section 78 of FA 1994. Having agreed with the appellant as regards duty payment on the other two services are concerned and having found a penalty under section 78 ibid to be proper, the penalty under section 77 need not be separately imposed. Appeal allowed in part.

Issues Involved:
1. Taxability of assignment/nomination fee under 'Real Estate Agent Service'.
2. Classification and taxability of services provided to M/s Golden Constructions.
3. Taxability of Goods Transport Agency (GTA) service.
4. Applicability of extended period for issuing Show Cause Notice (SCN) and imposition of penalties.

Summary:

1. Taxability of Assignment/Nomination Fee under 'Real Estate Agent Service':
The main dispute relates to the tax demanded on 'Real Estate Agent Service'. The appellant challenged the taxability of the assignment fee/nomination fee received for causing the sale of land to JC as a 'real estate agent' service. The Tribunal examined the agreements and found discrepancies in the appellant's narration. The 'Agreement to Sell' and the 'Tripartite Agreement' indicated that the appellant played a dominant role in facilitating the sale of land, receiving Rs. 14 crores as an assignment/nomination fee. The Tribunal concluded that the appellant rendered active service in relation to the sale of land, thus falling under the 'real estate agent' service. The appellant's attempt to suppress information and evade service tax was established, making them liable to pay duty and interest as per the extended time limit. The statutory penalty under section 78 of the Finance Act, 1994, was also upheld.

2. Classification and Taxability of Services Provided to M/s Golden Constructions:
The allegation was that the appellant provided 'Consulting Engineer Service' by managing a construction project for M/s Golden Constructions. The Tribunal found that the services rendered were more in the nature of "support services of business or commerce" rather than consulting engineering. The appellant's activities included supervision of construction, labor payment management, and customer relationship management, which fall under 'Business Support Service' as per Section 65(104c) of the Finance Act, 1994. The appellant had already paid the duties demanded after the issue of the impugned order. The Tribunal held that no consultancy or advice was rendered, and the service was taxable under 'Business Support Service'. The imposition of penalty in this regard was set aside.

3. Taxability of Goods Transport Agency (GTA) Service:
The appellant did not contest the claim regarding the GTA service and had paid the service tax before the issue of the SCN. The Tribunal found no suppression of fact with the intention to evade duty concerning the GTA service. The proceedings would stand concluded as per sub-section (3) of section 73 of the Finance Act, 1994, when there is no suppression, fraud, etc., involved, and the duty and interest have both been paid before the issue of SCN. Since interest had not been paid, the condition was not fulfilled, but no further penalty was imposed.

4. Applicability of Extended Period for Issuing SCN and Imposition of Penalties:
The appellant argued that the extended period for issuing SCN could not be invoked as the department had knowledge of the transactions since 2009, and the SCN was issued in 2012. The Tribunal referred to the Hon'ble Madras High Court's judgment in King Bell Apparels v. Commissioner of Central Excise, Salem, which held that the concept of knowledge cannot negate the suppression of facts. The Tribunal found that suppression with the intention to evade payment of duty was established in this case, making the appellant liable to pay the statutory penalty under section 78 of the Finance Act, 1994. The penalty under section 77 was set aside.

Conclusion:
The appeal concerning the 'Real Estate Agent' service was rejected. The matters relating to 'Business Support Service' and 'GTA' were decided in the appellant's favor, with penalties set aside for these services. The appellant was directed to pay the interest without further delay. The appeal was partially allowed, and the impugned order was modified accordingly. The duty on 'real estate agent' service, along with applicable interest, was to be paid by the appellant. The statutory penalty on account of 'real estate agent' service was to be re-worked and paid accordingly. The appeal was disposed of on these terms.

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