https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=759968 https://www.taxtmi.com/caselaws?id=759968 Levy of service tax - income earned by the noticee from the foresee transaction of selling allotment rights in respect of selling flats to buyers - amount charged in the name of demand survey - cancellation charges and miscellaneous income received by the noticees - Extended period of limitation - Penalty - interest. Whether the income earned from selling allotment rights of flats is exigible to service tax? - HELD THAT:- On examining the terms and conditions under the MOU, it is found that the society had agreed to book 232 apartments, the sale price of which was payable by them. Further, Clause 6 of the MOU is relevant to be appreciated as it provides that in case the society fails to confirm the purchase of all the 232 apartments to the company within the time prescribed, the company will be entitled to forfeit the entire sum of Rs.11 lakhs, which has been deposited 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 appellant does not fall within the ambit of services . Consequently, even during the post-negative era, respondent is not exigible to service tax. Following the decision in M/S SAUMYA CONSTRUCTION PVT. LTD. VERSUS CST AHMEDABAD [ 2013 (12) TMI 379 - CESTAT AHMEDABAD] , the Principal Bench in M/S ESS GEE REAL ESTATE DEVELOPERS PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2019 (6) TMI 633 - CESTAT NEW DELHI] , where the owners granted/assigned exclusive rights to the appellant to develop the property and to sell individual developed plots in a phased manner and as consideration for the same the owners were entitled to receive from the appellant the amounts specified in the agreement. Taking note of the Circular No. B 11/3/98-TRU dated 7.10.1998 clarifying that activity of actual construction of any building, carried out by builders or developers does not attract service tax levy as it is not a service within the meaning of the term Real Estate agent or Real Estate Consultant , it was concluded that as per the agreement, extensive construction and development had to be carried out by the appellant and it is thereafter the land or plots were to be sold for which the finances were also arranged by the appellant and, therefore, does not fall in the category of Real Estate Agent . Service tax on amount charged by the respondent in the name of Demand Survey - HELD THAT:- The Adjudicating Authority referring to the actual transaction on the basis of which the amount of Rs.5000/- was deposited by the customers along with the application form had dropped the demand. The findings arrived at is agreed upon, as the said amount is adjusted against the price of the property in the customers account on finalising the deal or is refunded to the customer in the event the property is not found to be suitable. It has been rightly noted that the department has accepted the said situation in the show cause notice. Leviability of service tax on the Cancellation Charges - HELD THAT:- There are no hesitation in agreeing with the findings arrived at by the adjudicating authority that the cancellation charges are in the nature of penalty levied on the buyers for not fulfilling the commitment in which no real estate agent service is being provided by the appellant and hence, no service tax is leviable thereon. Similarly, the Miscellaneous Income has been verified as per the ledger 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. Case-Laws Service Tax Mon, 23 Sep 2024 00:00:00 +0530