2024 (3) TMI 692 - AT - Service Tax

Levy of service tax - collecting transfer/administrative charges for providing services in relation to change/substitution of the names in cases where the property were transferred by original customers - suppression of facts or not - extended period of limitation - HELD THAT - M/s Vatika Ltd. have charged administrative/transfer expenses for incorporating the name of the new buyer in their records in case of any sale by the original buyer to others; it is not brought on record as to whether M/s Vatika Ltd. were involved in any sale/purchase of the property as a mediator or in any capacity. They have not involved themselves in the negotiations between the purchaser and seller. Tribunal has been consistent in holding that such transfer/administrative charges are not chargeable to service tax. Tribunal held in the case of CST, NEW DELHI VERSUS M/S ANSAL PROPERTIES AND INFRASTRUCTURES LTD. 2017 (9) TMI 1071 - CESTAT NEW DELHI that in the present case the respondent is a real estate developer selling their constructed flats. They are dealing with the buyers, old or new, on principal to principal basis. Accordingly, we are in agreement with the impugned order that no service tax liability can be confirmed against the respondent under this category. Appeal filed by Revenue is dismissed.

Summary

Issues involved:
The issues involved in the judgment are whether transfer/administrative charges collected by a real estate developer for changing names in property records are liable to service tax under the category of real estate agent services.

Details of the judgment:

Issue 1:
The Appellant, a real estate developer, collected transfer/administrative charges for changing names in property records. The Revenue contended that these charges were chargeable to service tax under real estate agent services. The Commissioner confirmed the demand, relying on a CESTAT decision. The Appellant argued that they were not involved in sale or purchase negotiations and cited precedents where similar charges were held non-taxable. The Tribunal found that the Appellant did not act as a real estate agent and had no role in property transactions, consistent with previous decisions. The Tribunal held that the charges were not liable to service tax.

Issue 2:
The Revenue argued that the charges were related to sale or purchase of real estate, making them taxable under service tax laws. The Appellant contended that they were not engaged in real estate agent services as they primarily sold units to buyers and only collected administrative charges. The Tribunal referenced previous cases where similar charges were deemed non-taxable, emphasizing that the Appellant did not act as an agent in property transactions. The Tribunal held that the charges were not exigible to service tax, supporting the Appellant's position.

Separate Judgment:
The Tribunal dismissed the appeals filed by the Revenue (ST/2743/2012 and ST/3070/2012) and allowed the appeal filed by the Appellant (ST/60130/2016). Additionally, a miscellaneous application by the Revenue to change the cause title of the respondent in one appeal was allowed.

This summary provides a detailed overview of the issues, arguments, and the Tribunal's decision in the legal judgment without revealing the names of the parties involved.