Refundable property advances escape service tax where not consideration, while own-flat sales are not agent services.

Refundable advances or security deposits received for proposed property transactions are not taxable consideration where records establish that they were refundable and were returned when transactions did not proceed. Under section 67(2) of the Finance Act, 1994, amounts received without separate recovery of service tax must be treated as inclusive of tax, allowing cum-tax valuation. A verified original completion certificate can support the claimed service-tax benefit and should not be rejected merely for an initial failure to produce it. Sale of flats acquired and owned by the seller is a transaction in its own immovable property, not a taxable real estate agent service.

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Issues: (i) Whether refundable advances received against proposed property transactions constituted taxable consideration for construction services; (ii) whether the cum-tax benefit was available where service tax was not separately recovered; (iii) whether the completion certificate produced by the assessee could support the claimed service-tax benefit; and (iv) whether the sale of flats acquired and owned by the assessee attracted service tax as real estate agent services.

Issue (i): Whether refundable advances received against proposed property transactions constituted taxable consideration for construction services.

Analysis: The documentary evidence, including agreements, customer-wise and year-wise receipt and refund charts, balance sheets and bank statements, established that the amounts were refundable security deposits or advances for finding suitable properties. The amounts were refunded where the proposed transactions were not completed. Mere classification of the amounts under current liabilities did not establish that they represented consideration for a taxable service.

Conclusion: Refundable advances did not constitute taxable consideration and were not liable to service tax.

Issue (ii): Whether the cum-tax benefit was available where service tax was not separately recovered.

Analysis: Section 67(2) of the Finance Act, 1994 applies where tax is not separately recovered, requiring the gross amount received to be treated as inclusive of tax. No separate recovery of service tax by the assessee was established.

Conclusion: The cum-tax benefit was correctly available to the assessee.

Issue (iii): Whether the completion certificate produced by the assessee could support the claimed service-tax benefit.

Analysis: The original completion certificate issued by the Municipal Corporation of Delhi had been produced, verified and returned. Its rejection solely because the original was not initially produced was therefore not justified.

Conclusion: The benefit based on the completion certificate could not be denied to the assessee.

Issue (iv): Whether the sale of flats acquired and owned by the assessee attracted service tax as real estate agent services.

Analysis: The agreements and allotment documents showed that the assessee had purchased the flats and subsequently sold them as their owner. The transaction was a sale and purchase of the assessee's own immovable property, not the provision of real estate agent services.

Conclusion: The subsequent sale of the assessee's own flats was not liable to service tax as real estate agent services.

Final Conclusion: The findings concerning the refundable advances, valuation, completion certificate and sale of the assessee's own flats remain undisturbed, with no service-tax liability arising on the disputed grounds.

Ratio Decidendi: Refundable advances that are not consideration for a rendered taxable service are not chargeable to service tax; where tax is not separately recovered, the gross amount is inclusive of tax; and sale of immovable property owned by the seller is not a real estate agent service.

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