2019 (9) TMI 1529 - AT - Service Tax

Tribunal Grants Relief, Rejects Service Tax Liability on Transfer Charges

M/s. Rajasthan State Industrial Development& Investment Corporation Ltd. (RIICO Ltd.) Versus Assistant Commissioner, Central GST, Alwar (Raj.)

M/s. Rajasthan State Industrial Development& Investment Corporation Ltd. (RIICO Ltd.) Versus Assistant Commissioner, Central GST, Alwar (Raj.) - TMI Issues involved:1. Determination of service tax liability on transfer charges collected by the appellants.2. Adjustment of sanctioned refund against confirmed demands for transfer charges.Analysis:Issue 1: Determination of service tax liability on transfer charges collected by the appellantsThe appellants were engaged in providing Management, Maintenance, or Repair Services and were found collecting transfer charges categorized as Real Estate Agent/Real Estate Consultant Services. The Central Excise Commissionerate issued show cause notices proposing the recovery of Service Tax amounts along with penalties for the transfer charges collected. The Order-in-Original confirmed the demands, which were later partly set aside by the Tribunal. The appellants were subsequently held entitled to a refund, but the refund amount was ordered to be adjusted against the confirmed demands. The appellants contended that the transfer charges were wrongly made adjustable as the Tribunal had set aside the demand related to these charges. The Department argued that since the Tribunal had only partially allowed the appeal, the demand was not entirely set aside, justifying the adjustment of the refund.Issue 2: Adjustment of sanctioned refund against confirmed demands for transfer chargesThe Tribunal had previously decided that the transfer charges collected by the appellants could not be subjected to service tax liability under the category of real estate agent services. The Tribunal clarified that the appellants were not acting as agents but were dealing with allottees on a principal-to-principal basis, thus liable to be taxed under the category of renting of immovable property services. The demand for transfer charges was set aside for the period starting from July 2010 onwards when demanded under renting of immovable property services. However, the impugned Order-in-Original sought to adjust the refund against demands for transfer charges from a period before July 2010, which had already been set aside by the Tribunal. The Commissioner (Appeals) erred in not recognizing the specific findings of the Tribunal and wrongly held that the demand for the period before July 2010 was confirmed, leading to the rejection of the appellant's claim for not adjusting the refund.In conclusion, the Tribunal held that the Commissioner (Appeals) failed to appreciate the Tribunal's findings and committed an error in rejecting the appellant's claim for adjusting the refund against demands that were actually set aside. The Tribunal set aside the Order-in-Original, allowing both appeals and directing consequential relief to follow.