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TMI Blog2024 (10) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... posited by the society as advance. This establishes that the appellant is acting on principal to principal basis being solely responsible for the sale of the flats and in the event of failure, are liable to bear the consequences. In the entire transaction, there is no scope of commission being paid to the appellant either by the builder or by the subsequent customers. The contention of the Revenue that the respondent receives consideration for the services by retaining a certain amount from the total amount paid by a customer to the builder and, therefore, the role is similar to the role of a Real Estate Agent, cannot be upheld. The profit earned by way of difference in the amount which the appellant paid to the builder and what is collected from the customers cannot really be termed as commission . The definition of service specifically excludes the activities which constitutes a transfer of title in goods or immovable property, by way of sale, gift, or in any other manner. In view of our conclusion that the respondent is engaged in sale-purchase of flats which involves transfer of rights in immovable property, on the simple reading of the definition, the activity rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger account where the miscellaneous income has been reflected as discount extended to them on the advertising service on which no element of service is involved. Extended period of limitation - Penalty - interest - HELD THAT:- Since the issue on merits stands decided in favour of the respondent, there are no reason to go into the question of the applicability of the extended period of limitation or the imposition of penalty and interest. There are no error in the impugned order and the same is, hereby affirmed - appeal of Revenue dismissed. - MS. BINU TAMTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri S.K. Ray , Authorised Representative for the Department Shri A.K. Batra, Advocate for the respondent. ORDER The Revenue has filed the present appeal challenging the order-in-original no.04 05-Commr./CGST Audit-I/2018 dated 13.07.2018 dropping the demand towards the service tax proposed under show cause notice under the category of Real Estate Agent Service under Section 65(105)(b) read with section 65(88) and (89) of the Finance Act, 1994 [Act, 1994]. 2. M/s. Government Official Welfare Organization, the respondent herein is a trust and is essentially servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted by the builders as well as by the buyers. 3.5. The respondent transferred the 10% amount to the builder after adjusting the amount of security deposited with the builder and after retaining its profit margin or contributing its share of loss i.e. the difference between the agreed price with the builder and actual sale price. 3.6 Lastly, an agreement, namely, builder buyer agreement was executed between the builder, respondent and the buyer for the price as agreed between the respondent and the builder at the time of entering into a MOU. Further, the balance amounts in instalments are to be paid by the buyer directly to the builder. 4. Based on an information received from Anti Evasion Branch, an investigation was initiated against the respondent and it was alleged that the respondent is acting as Real Estate Agent and is providing such services on which service tax was not paid by it. Accordingly, the respondent was served with show cause notice dated 17.10.2014 proposing service tax demand at full rate on the demand survey, cancellation charges, miscellaneous charges and the margin money. During the period in dispute, the respondent sought registration with the Service Tax D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase and sale of allotment rights of flats. Thus, demand of service tax under the taxable category of Real Estate Agent Service has rightly been dropped vide impugned order. 8.2 Respondent is purchasing the allotment rights in bulk and is selling the units to the buyers. 8.3 The respondent is neither hired by builder nor the customers, thus they cannot be said as agent , rather the respondent is buying and selling the units in its individual capacity. 8.4. The learned Counsel has placed reliance on the following decisions:- 1. Ess Gee Real Estate Developers Pvt. Ltd. Vs. CCE, Jaipur dated 30.05.2019 [ 2020 (34) GSTL 486 (Tri.-Del.) Affirmed by Hon ble Apex Court] 2. Saumya Constructions Pvt. Ltd. Vs. CST, Ahmedabad dated 25.09.2023 [ 2016 (46) STR 723 (Tri.-Ahmd.)] 3. M/s.Rattha Holding Co. Pvt. Ltd. Vs. Commissioner of Central Excise Tax, Chennai dated 27.08.2018 [ 2018(9)TMI 1722-CESTAT-Chennai] 8.5 The Respondent s transaction falls outside the scope of services as defined in Section 65B(44)of the Finance Act, 1994 for two reasons:- (a) The respondent s acquisition of the right in immovable property constitutes a benefit derived from the land, which is subsequently conveyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or technical assistance in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate. 11. The above statutory provisions makes it clear that in order to be covered under the definition of Real Estate Agent or Real Estate Consultant , it is necessary to ascertain whether the appellant is providing the services referred therein. Hence, the nature of services provided by the appellant is that of sale-purchase of flats in the various projects. As noticed from the introduction in the agreement/contract, where it says that, the three essential aims and objective with which the society has been created is to provide low-cost and affordable housing, welfare and consultation. Under the heading main objectives, comes the aim of providing low cost housing, and under the heading incidental objectives falls the welfare activities and consultation (Govt. Advisory: Nation Building). 12. Therefore, the main and the dominant activity is providing low cost housing, i.e, sale of flats and any other activity, which the appellant performed are only incidental or ancillary to the main activity. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent . 15. An important factor, which needs to be appreciated is that under the MOU, the appellant is exclusively responsible to sell the flats. As in the event, the booked flats are not sold within the prescribed time limit, the earnest money deposited by the appellant with the builder is forfeited. The relevant para of the MOU is quoted below:- In case the society fails to confirm the purchase of all the 232 flats (or such reduced number of flats, being the minimum number of flats required to be booked by the society) to the company within the time prescribed in Clause 5 above, the company will be entitled to forfeit the entire sum of Rs.11,00,000/- which has been deposited as advance. 16. In the entire transaction, there is no scope of commission being paid to the appellant either by the builder or by the subsequent customers. The contention of the Revenue that the respondent receives consideration for the services by retaining a certain amount from the total amount paid by a customer to the builder and, therefore, the role is similar to the role of a Real Estate Agent, cannot be upheld. The profit earned by way of difference in the amount which the appellant paid to the builder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise out of land which as per the definition of immovable property given in the General Clause Act, 1897 is part of immovable property. Such transfer would therefore be outside the ambit of service being a transfer of title in immovable property. 19. In arriving at the conclusion that the appellant has not rendered any service in the nature of real estate agent, we would like to refer to the decisions relied on by the learned Counsel for the appellant. In the case of Saumya Construction P. Ltd, (supra), the Tribunal while dealing with the issue whether the appellant was liable to discharge service tax under the category of Real Estate Agent Service for the amount received by it as development charges, had taken the view that in order to be covered under the definition of Real Estate Agent and Real Estate Consultant , it is necessary to find out whether any services have been rendered directly or indirectly involving the business of sale or purchase of the property, leasing or renting of the property and thereby gets an amount as a commission. Considering the facts in that case, the Tribunal found that the appellant envisaged conceptualized developed, implemented and marketed the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was fixed in the deal for acquisition of land and the assessee either had surplus/profit or had incurred loss. The relevant para of the said decision is set out below:- 32 . From the perusal of Memorandum of Understanding (MoU) between the appellants and M/s. Sahara India Ltd. It is very obvious that MoU is not only for providing purely service for acquisition of the land, but involves many other function such as verification of the title deeds of the persons from whom the lands are to be acquired and obtaining necessary rights for development of the land from the Competent Authority. The remuneration or payment for providing this activity, has actually not being quantified in the MoU. The MoU provides that, the difference, if any, of the amount being actually paid to the owner 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 in the nature of margin (profit/loss). We hold that for levy of service tax, a specific amount (consideration for service) has to be agreed between the service recipient and the service provider. As no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that any of these collections are directly attributable to an identified activity, such fees or charges will conform to the charging section for taxability and, to the extent that they are not so attributable, provision of a taxable service cannot be imagined or presumed. Recovery of service tax should hang on that very nail. Each category of fee or charge, therefore, needs to be examined severally to determine whether the payments are indeed recompense for a service before ascertaining whether that identified service is taxable. 23. The decision relied on by the learned Authorised Representative in Chattisgarh Steel Castings (P) Ltd. [ 2020(34) GSTL 70 (Chhattisgarh)] is distinguishable on facts and hence does not support the case of the Revenue as the documents relied on were general power of attorney and the declaration, which were only an authorization to sell and facilitate the appellant therein to find a buyer for the land without the involvement of the land owners. The sale deed was ultimately executed by the land owners and not by the appellant and therefore it was held that the appellant had acted as a middleman or agent in the purchase and sale of immovable property and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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