2019 (1) TMI 911 - AT - Service Tax

Classification of services - Real estate agent services or not - part consideration paid as earnest money and part was prayed to be paid before the Sub-Registrar at the time of registration of sale deed - transfer of sale deed to ultimate purchaser - Held that - Though appellant initially got an agreement executed by the owner of the property in his favour holding him to be the purchase of the land. But immediately thereafter he entered into another agreement, on behalf of the owner for re-sale of the plot in favour of someone else that too at much higher prices. This fact is sufficient to hold that appellant has not merely entered into an agreement as a party thereto, but in fact has engaged himself in rendering the services of sale of the property in favour of someone else irrespective that agreement to sell was initially executed in his favour. The aforesaid definition of real estate agent in Section 65 (88) of the Act makes it clear that it is not merely the real estate consultant but any person who facilitates getting any property /real estate sold, purchased, leased out or rented out shall be called as real estate agent and the services rendered by him under said capacity shall be taxable under Section 65 (105) (v) of the Act. Thus, the arguments of the appellant are not sustainable. There seems no justification for any bonafide misapprehension/ misconception on the part of the appellant as far as the definition of real estate agent is concerned - Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the appellant is liable to pay Service Tax as a real estate agent for the transactions involving the sale of properties.
2. Whether the show cause notice issued to the appellant was barred by time limitation.

Analysis:

Issue 1: Liability to Pay Service Tax as a Real Estate Agent
The appellant earned income from two transactions involving the sale of properties. In the first transaction, the appellant facilitated the sale of an agricultural plot, earning &8377; 1,61,81,450. In the second transaction, the appellant earned &8377; 2,50,00,000 from the sale of land. The appellant initially purchased the land at a fixed price and then resold it to a third party at a higher price. The Tribunal observed that the appellant engaged in rendering services of sale of the property to someone else, thus falling under the definition of a real estate agent as per Section 65(88) of the Finance Act, 1994. The Tribunal held that the appellant's actions constituted providing services as a real estate agent, making the Service Tax liability applicable under Section 65(105)(v) of the Act. The arguments presented by the appellant were deemed unsustainable, and the order confirming the Service Tax liability was upheld.

Issue 2: Time Limitation of Show Cause Notice
The appellant contended that the show cause notice was barred by time limitation due to the lack of intention to evade duty. However, the Tribunal found the appellant's conduct to be casual, as evidenced by delays and non-compliance with orders. Despite various legal proceedings and delays, the appellant failed to appear for the final hearing of the appeal. The Tribunal noted the appellant's attempts to delay proceedings to avoid the liability of paying Service Tax. The Department's observations regarding the appellant's conduct, indicating an intent to evade tax, were considered to have a valid basis. Consequently, the Tribunal dismissed the appeal, upholding the order and rejecting the appellant's arguments regarding the time limitation of the show cause notice.

In conclusion, the Tribunal upheld the order confirming the Service Tax liability on the appellant for acting as a real estate agent in the property transactions. The appellant's conduct, delays, and non-compliance with orders were deemed indicative of an intent to evade tax, leading to the dismissal of the appeal.