2019 (3) TMI 867 - AT - Service Tax

Tribunal rules admin charges not taxable as Real Estate Agent's Service

M/s Bestech India Private Limited Versus Commissioner of Central Excise New Delhi.

The Tribunal allowed the appeal against the demand of Service tax under the 'Real Estate Agent's Service' category. The dispute arose from administration ... Real Estate Agent’s Service - demand of service tax - period 01 April 2006 to 31 March 2011 - Held that:- In Ansal Properties Infrastructure Ltd. [2017 (11) TMI 546 - CESTAT NEW DELHI], the Tribunal held that the transfer charges received by the appellant for permitting the transfer of land from one person to another cannot be taxed as ‘Real Estate Agent Service’. The Appellate Authority has completely failed to appreciate the contentions advanced by the appellant and committed an error in holding that the payment received by the appellant towards the administrative charges was as ‘Real Estate Agent Service’. In fact, the Appellate Authority relied upon an interim order passed in the appeal filed by M/s MGF Developments Limited, which appeal was ultimately dismissed. The order passed by the Appellate Authority cannot be upheld - appeal allowed. Issues:Appeal against order confirming demand of Service tax under 'Real Estate Agent's Service'; Appellant received administration charges for changing name in ownership records; Dispute on whether charges are for administrative expenses or Real Estate Agent's Service; Appellant's contention based on Tribunal decisions; Failure of Appellate Authority to appreciate contentions.Analysis:The appeal was filed challenging the order confirming the demand of Service tax under the category of 'Real Estate Agent's Service' for the period from April 2006 to March 2011. The Appellant, a real estate developer, received administration charges from customers for changing names in ownership records upon property transfer. The dispute arose as the Service Tax Department believed these charges were for 'Real Estate Agent's Service', while the Appellant argued they were for administrative expenses. The Appellant's argument was supported by Tribunal decisions in similar cases.The Appellant contended that the charges were not liable for service tax under 'Real Estate Agent's Service' category, citing Tribunal decisions in cases like Ansal Properties Infrastructure Ltd., Ansal Housing & Construction Limited, and MGF Developments Ltd. These decisions highlighted that charges for permitting land transfer cannot be taxed as 'Real Estate Agent Service' if the provider did not act as an agent in the sale or purchase transaction. The Tribunal emphasized that the Appellant was a developer selling constructed flats on a principal-to-principal basis, not as a real estate agent.The Appellate Authority upheld the demand, relying on an interim order in another case that was eventually dismissed. The Tribunal found the Appellate Authority erred in considering the charges as 'Real Estate Agent Service' and failed to appreciate the Appellant's contentions. Consequently, the Tribunal set aside the Appellate Authority's order and allowed the appeal against the demand of Service tax under the 'Real Estate Agent's Service' category.In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions and previous Tribunal judgments, emphasizing that charges for administrative purposes, not related to sale or purchase transactions, cannot be taxed under 'Real Estate Agent's Service'. The Tribunal's detailed analysis and reliance on precedents provided clarity on the issue, leading to the appeal being allowed in favor of the Appellant.