2009 (3) TMI 23 - AT - Service Tax

Real Estate Agent - Amount received as commission for introducing the prospective buyer of plot and arranging the sale thereof - SCN issued proposing demand under the category of Real Estate Agent held that activities of arranging sale thereof would cover the definition of Real Estate Agent - So, demand of tax and interest are justified - submission of the appellant that the amount of penalty is excessive, is accepted so penalty is reduced

Summary

Issues:
1. Interpretation of the term "Real Estate Agent" for tax liability.
2. Consideration of evidence and documents in tax proceedings.
3. Imposition of penalties under relevant sections of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in manufacturing M.S. Ingots, received income from commission for introducing buyers and arranging property sales. The dispute arose regarding the tax liability under the category of "Real Estate Agent." The Commissioner confirmed the tax demand and penalties, which the appellant challenged in appeal. The appellant argued that the payment received was for introducing buyers, not falling under the definition of a "Real Estate Agent." The Asst. Commissioner initially dropped the proceedings, but the Commissioner upheld the demand based on the appellant's letter from 2002.

2. The appellant clarified in the letter that the commission was for introducing buyers and arranging property sales. The Tribunal observed that the definition of "Real Estate Agent" includes services related to real estate transactions. The Asst. Commissioner failed to consider the appellant's clarification in the letter, leading to a conclusion that the appellant's activities fell under the definition of a "Real Estate Agent." Consequently, the demand for tax and interest was deemed justified based on the activities of arranging property sales.

3. Regarding penalties, the Tribunal agreed with the appellant that the penalty amount was excessive. Noting that the original authority had dropped the proceedings, the Tribunal upheld penalties of Rs. 500/- under Section 75A and Rs. 1000/- under Section 77 of the Finance Act, 1994. However, the penalty under Section 76 of the Act was reduced to Rs. 20,000. The appeal was disposed of accordingly, with the Tribunal's decision pronounced in the open court.