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TMI Blog2018 (11) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... e availability of land owner at the office of the Registrar for execution of the sale deed. In fact Sahara India instead of paying the price directly to the land owner, paid lump sum amount to the appellant. Thereafter the appellant identified the land, the seller, and after being satisfied with the title of the seller, entered into agreement with the seller and obtained power of attorney, in their favour. Thereafter the appellant transferred the land in favour of Sahara India. Thus the transaction is one of trading in land. In such transactions the appellant could either incur a loss or have a surplus (profit). It is very clear from the provision of the MoU that the amount payable to the appellant is not quantified and it is more of the nature of a margin and share in the profit of the deal in purchase of land. For levy of service tax, a specific amount has to be agreed between the service recipient and the service provider. As no fixed amount has been agreed in the MoU which have been signed between the parties, the amount of the remuneration for service, if any is not clear in this case - since the specific remuneration has not been fixed in the deal for acquisition of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Developers Kanpur 09.08.2003 100 8,50,000/- Lalitpur 15.11.2003 100 5,75,000/- Raeberalli 16.05.2005 125 7,50,000/- 4. Under the MOU, Sahara India, had agreed to pay an average rate per acre of land to be purchased by Sahara India, which land would be identified, divided and demarcated by the appellant firm together with necessary documents and other formalities. The MOU for each site specifically provided the obligations of both the parties. It specifies that Sahara India had agreed to procure land at the aformentioned locations, at the fixed average rate per acre, which included all the cost of land, development expenses (items). The obligations of the appellant under the MOU were- (a) divide and demarcate the entire land into the blocks of 20 to 30 acres, (b) purchase the land in contiguity block wise, (c) furnish title papers and other necessary documents for the land to be purchased (d) obtain the permission and approval from the concerned authority for transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein Sahara India was interested to purchase 100 acres of land for developing residential township in and around the city of Lalitpur. The appellant assured to make available 100 acres of land situated in the village Rora, Distt. Lalitpur U.P., with direct opening or acess of at least 1000 feet on the National highway. The salient features of the agreement are; 6.1 The process of land purchase shall be in a compact contiguous, adjacent and plot wise or block wise manner starting from the roadside. 6.2 The appellant shall furnish the title papers and all other necessary documents with reference to the land proposed, within 15 days from the date of signing of the MOU. 6.3 Thereafter the appellant shall obtain and furnish, each and every other necessary permission/ approval from the Government body/competent authority, or other regulatory authority, required for transfer of the land proposed, and further arrange for the purchase of land proposed under the MOU, at the average agreed rate per acre, within two months or within such further time at the discretion of Sahara India. 6.4 All expenses for obtaining proof of title and approval (except for ULC clearance) required for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of the entire land. In case, the appellant fails to fulfil its obligations as stipulated in the terms of the contract/MOU, the same can be terminated by Sahara India and the withheld amount is liable to be forfeited. All expenses for registration of documents relating to the transfer or agreement of sale, etc., shall be borne by Sahara India. Further all expenses of mutation of land in the office of the concerned Revenue authority shall be borne by Sahara India and the appellant shall be required to coordinate and to do the work of Pairvi in respect thereof in the concerned offices and shall provide to Sahara India all necessary help so as to get the work of mutation completed. 7. It appeared to Revenue that the appellant was liable to pay the service tax under the classification Real Estate Agent Service (introduced with effect from 1st October,2004) under section 65(88) of the Finance Act which defines a real estate agent as a person who is engaged in rendering any service in relation to sale, purchase, leasing and renting, of real estate and includes a real estate consultant. 8. Real Estate consultant is defined under section 65(89) of the Finance Act. Real Estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts are to be taken for the purpose of calculation of taxable value for levy of service tax, therefore, the total amount received ₹ 16,75,73,500/- would be the proper value for calculation of service tax. Accordingly, as per the SCN dated 22nd April 2010, for the extended period 1st October 2004 to 31st March 2007, service tax including Cess was demanded at ₹ 1,55,10,433/- by treating gross value (receipt) as cum tax. 12. The SCN further alleged that the appellant have suppressed the facts of rendering the taxable service, during the said period. Further neither they obtained the service tax registration as Real estate agent/consultant nor filed the service tax returns, as prescribed. Thus it appears that the appellant failed to disclose truly the material facts, like nature of service provided by them, the gross amount received by them for rendering of taxable service, necessary for their assessment to tax for the said period. It appeared that such act of omission was deliberate with intent to evade payment of service tax. Had the officers of Directorate General not initiated inquiry against the appellant, the none payment of service tax by the appellant would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y service nor any service have been provided by the appellant. The understanding of the Ld. Commissioner that since the land sold to Sahara India is not in the name of the appellant, therefore it is not a transaction for sale and purchase of land, is misplaced. For a principal to principal transaction for purchase and sale of land, it is immaterial whether the property sold is in the name of the seller or in the name of some 3rd party. In the facts of the present case, admittedly there is a transaction of purchase and sale. The land being sold to Sahara India being not in the name of the appellant, is not the decisive factor. What is relevant is to see the transaction between the parties. As the transaction is for purchase and sale of land there is no element of service involved. The other incidental obligations of the appellant/seller to scrutinize all the documents, to ensure the actual owner's presence at the time of registry, et cetera, are for carrying out the objective of the MOU between the parties. It is further submitted that sale/purchase the property or investment/booking of land, is the business on principal to principal basis and not a service as an agent. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have bought the land first in its own name and then sold the same to Sahara India, while making profit/loss out of the transaction of sale, Department would not have treated the said transaction as service. Mainly because in the present case the appellant does not transfer the land first in its own name and then in the name of Sahara India, rather the deal for land is struck by appellant, and then directly transferred in the name of Sahara India by the seller, would make no difference insofar as the nature and character of transaction is concerned, which is one of booking profit/loss in a transaction of sale and purchase of property. This is evident from the fact that, suppose appellant only makes a loss in the entire transaction, then obviously there would be no service tax, even as per the Department. It is further submitted that service tax is not dependent upon profit or loss in a transaction. A true consideration in a service contract is the consideration for the service rendered, which is irrespective of the fact whether the service provider earned profit or loss out of the transaction. In the present case, if the department's case is to be accepted, only in the ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal to principal basis. Further the learned counsel places reliance on the ruling in the case of C.C.E Kerala Vs. Larsen Ltd Toubro Ltd. 2015 (39) STR 913 (SC) which was rendered by the Apex court in the context of levy of service tax on work contract. Supreme Court has held that service tax under the Finance Act can be levied on the services contracts simplicitor, without any other element involved in them (transfer of property in Goods). It is further submitted that even though the aforesaid decision was rendered in the context of indivisible works contract, the principal on the basis of which the said decision was rendered, is that the Finance act seeks to tax service contracts simplicitior and not other contracts. Applying the same principle in the facts of the present case it is evident that the Finance Act seeks to tax only such service, which are provided in relation to Real estate by a real estate agent. It does not contemplate taxing a transaction like the present one, which is for sale and purchase of immovable property and assuming without admitting, includes some alleged real estate service. In the absence of any statutory mechanism to tax the different element of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the land) as is evident from the sale deed. Further under the facts and circumstances there is no malafide alleged or any suppression of facts, for imposition of penalties is made out. Further no service tax is leviable on the price of land which is discernible from the value shown in the sale deeds. The appellant have also admittedly not collected any service tax. Hence they are also entitled to the cum tax benefit. Further in the facts and circumstances no penalty is imposable. 23. To Ld. A.R. for revenue states that the appellant have provided services to Sahara India relating to acquisition and development of real estate. Separate MOUs were executed with Sahara group in connection with the acquisition of land in the vicinity of three different cities. Under the MOU the appellant was to do several acts like to identify the land, to negotiate with the land owner, to examine the title paper, to confirm the title with the land records and thereafter to facilitate the transfer of land in favour of Sahara India. Also It was also required to obtain necessary permission/approval, if need be, from the appropriate authority for the transfer of the land. The expenses for search of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owhere enters into the shoes of the land owner or seller of the land. 25. Further in the statement of Mr. Yadav partner, he had stated that the average rate of land as per the MOU is inclusive of all the taxes. Further the consideration for the service is the difference between the average rate and the actual price of the land, paid to the land owner, which is payable to the appellant. Further the case laws relied by the appellant are not applicable in the facts of the present case. Further the Ld. Commissioner has held in para 40.5 of the impugned order, that the cost of land is not to be included the gross value for levy of service tax however the appellant failed to provide the details of the amounts retained by them in the said transaction. Further the contention of the appellant on the basis of the judgement of Larsen and Toubro of the apex court, that the contract is indivisible and the service tax on part of the contract value, which pertains to services provided cannot be taxed. This argument is completely baseless and factually incorrect. The reason for this is the price given to the land owners is definite, the amount received from Sahara India is definite. Thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the land and the average rate shall be payable to the second party (appellant). It is very clear from the provision of the MoU that the amount payable to the appellant is not quantified and it is more of the nature of a margin and share in the profit of the deal in purchase of land. We feel that for levy of service tax, a specific amount has to be agreed between the service recipient and the service provider. As no fixed amount has been agreed in the MoU which have been signed between the parties, the amount of the remuneration for service, if any is not clear in this case. In this regard, we also take shelter of this Tribunal s decision in the case of Mormugao Port Trust vs. CC, CE ST, Goa 2017 (48) S.T.R. 69 (Tri. Mumbai). The relevant extract is reproduced here below :- 18. In our view, in order to render a transaction liable for service tax, the nexus between the consideration agreed and the service activity to be undertaken should be direct and clear. Unless it can be established that a specific amount has been agreed upon as a quid pro quo for undertaking any particular activity by a partner, it cannot be assumed that there was a consideration agreed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and the principle, therefore we are of view that taxable value itself has not acquired finality in this case. 30. It is also seen that some of the MoUs were not fully executed at the time of the issue of the show cause notice for example, in the case of MoU dated 15/11/2003 entered between Sahara India Ltd. and the appellant, the agreement is for provisioning of 100 acres of land at Village Rora, Distt. Lalitpur, U.P. and for this purpose an amount of ₹ 6,75,00,000/- have been remitted for land cost and an amount of ₹ 1,66,50,000/- have been remitted for the purpose of stamp duty and registration. Thus, a total amount of ₹ 8,41,50,000/- have been remitted to the appellant out of which a total amount of ₹ 3,66,32,000/- have been spent by the appellant for procurement and registration of land. Thus, an amount of ₹ 4,75,18,000/- still remain unspent with the appellant. It is to be seen that out of the above amount though the MoU was for 100 acres of land till the issue of the show cause notice only 77.96 acres of land could only be acquired and thus the remaining amount still was to be used for procurement/acquisition of balance land. This indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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