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2019 (6) TMI 1146
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....deed executed, copy of bank statement in evidence of the transactions of the purchase and sale. 2. Upon hearing of the parties, we find that the documents are by way of additional evidences, which are part of the record of court below and are necessary for deciding these appeals. Accordingly, the same are admitted. Further, the additional grounds also arise from the impugned orders and these are also admitted. Thus, the misc. applications stand allowed. 3. As the issue in these appeals is common, they are heard and taken-up together for common disposal. 4. The issue involved in these appeal(s) is whether the Appellants are liable to service tax under the category 'Real Estate Agent Services' as defined under Section 65(88) read with Section 65(89) & 65(105) (v). Appellant Name SCN/PERIOD Place/Site Area of Land (in acres) Amount received for procuring land Amount received (Cum-tax value) Service Tax Demand M/s.Elegant Developers SCN dt.22.04.2010 (1.10.2004) to 1.3.2007) Sriganganagar Varodara Kurukshetra 118.60 120.232 Nil 19,00,86,272 11,89,28,069 82,06,63,550 17,24,92,080 10,79,20,208 74,47,03,766 1,75,94....
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....to be purchased (d) obtain the permission and approval from the concerned authority for transfer of land and the expenses incurred in this regard, would be borne by the appellant firm, (e) bring the owners of the land for the purposes of negotiating, registration, etc, to the relevant places and bear all the expenses involved on these. The MOU further provided that the other expenses like stamp duty/registration charges, mutation charges would be borne by Sahara India. On satisfaction by Sahara India about the fitness of deal(s) for the land, appellant firm shall organise the registration in the name of Sahara India, after making the payment to the owners of land, from the advance amount given to them for the purchase of land. The difference, if any, between the amount actually paid to the owners of land and the average rate per acre settled between the parties as indicated, would be payable to the appellant firm, as their margin or profit. Further Sahara India had reserved its right to withhold 50 per cent of the amount (out of margin) to ensure that the obligations on the developer/appellant are fully discharged in terms of the MOU, and in case there was any serious default on th....
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....ter get the sale deed(s) executed by the cultivators/owners of land in favour of Sahara India or its nominees, after payment of remaining amount towards purchase. Where there are several co-owners in a 'Khata' (entry in the land record) the second party/appellant shall ensure that all the co owners execute the document (sale deed) at one time. In no case shall any document be executed by part co owners. That in the case the land is owned by minor, lunatic or an insane person, appellant will get appropriate guardianship certificate from the competent court/authority and agreement to sell shall be executed only with such guardian. In case any dispute is pending before any civil court or revenue Court, regarding title, share or for partition of the property, the appellant will try its best to get the settlement arrived among the co sharers/co owners and agreement to sell shall be executed accordingly. 10.7 That it is the responsibility of the appellant for bringing the cultivators/land owners to the Registrar office along with the necessary documents and photograph and to witness execution/registration of the documents. 10.8 That all payments to the Kashtkar/land owners, shall b....
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....ate Agent Services and they filed their returns regularly. They had entered into an agreement with SICCL for acquisition of about 100 acres of land for its Real Estate Project, at Behrampur, Orissa. As per MOU dated 28.07.2003 between the parties, it was provided and agreed to that cost of land shall be Rs. 7.45 lakhs per acre, inclusive of all taxes, at which SICCL will acquire land from the appellant including the margin of the appellant. Thus, the agreement herein also was similar to the agreement in the aforementioned two cases. In this activity, the appellant M/s City Linkers, actually suffered a loss. The total land procured was only 42.85 acres, against which the appellant incurred cost/payment to land owners amounting to Rs. 5,39,84,650. However, the appellant received only an amount of Rs. 5,05,00,000/-. Thus, the appellant suffered a net loss of Rs. 38,84,650/-. The said agreement was determined and the activity discontinued in the year, 2007. 14. It appeared to Revenue that the appellant was liable to pay the service tax under the classification 'Real Estate Agent Service' (introduced with effect from 1st October,2004) under section 65(88) of the Finance Act ....
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....d. Thus it appears that the appellant failed to disclose truly the material facts, like nature of service provided by them, the gross amount received by them for rendering of taxable service, necessary for their assessment to tax for the said period. It appeared that such act of omission was deliberate with intent to evade payment of service tax. Had the officers of Directorate General not initiated inquiry against the appellant, the none payment of service tax by the appellant would not have been unearthed. The SCN further proposed to impose penalty under Section 76,77 and 78 of the Act. Further personal penalty was proposed on Shri Rajat Yadav partner. 18. The SCN was adjudicated on contest, by the Ld. Commissioner, and the proposed demand was confirmed along with interest and equal amount of penalty was imposed under Section 78, along with further penalty under Section 77. The proposed penalty under Section 76 was dropped. Further personal penalty on Shri Rajat Yadav of Rs. 10,000/-, under Section 77(c) of the Finance Act was imposed. Being aggrieved, the appellant(s) are in appeal before this Tribunal. 19. The learned counsel for the appellant urges that the appellan....
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....arties. As the transaction is for purchase and sale of land, there is no element of service involved. The other incidental obligations of the appellant/seller to scrutinize all the documents, to ensure the actual owner's presence at the time of registry, et cetera, are for carrying out the objective of the MOU between the parties. It is further submitted that, sale/purchase of property or investment/booking of land, is the business on principal to principal basis, and not a service as an agent. The learned counsel relied on the ruling of Hon'ble Delhi High Court in the case of Home Solution Retail India Ltd vs. Union of India 2009 (14) STR 433(Tri-Delhi), wherein it has been held as follows: - "On the other hand, the service referred to with section 65(105)(v) which refers to a service provided by real estate agent in relation to real estate, does not, obviously, include the subject matter as a service. This is so because the real estate by itself cannot by any stretch of imagination be regarded as a service. Going back to the structured sentence, that is - service provided to A by B in relation to 'C', it is obvious that 'C' can either be a service such as dr....
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....ct that, suppose appellant only makes a loss in the entire transaction, then obviously there would be no service tax, even as per the Department. It is further submitted that service tax is not dependent upon profit or loss in a transaction. A necessary requisite in a service contract is the consideration for the service rendered, which is irrespective of the fact whether the service provider earned profit or loss out of the transaction. In the present case, if the department's case is to be accepted, only in the event of appellant making profit out of the transaction, it would be liable to pay service tax and no service tax will be payable in case of there being a loss. This negates the rendition of any service, apart from showing lack of consideration. Mere sale and purchase of land against profit or loss does not involve any service. Sale and purchase can be outright, or can be upon booking, or in any other manner. Reliance is placed on the ruling of this Tribunal in the case of Commissioner of Service, New Delhi vs. Karam Freight Movers- 2017(4) GSTL 215 (Tri-Delhi), wherein it was held that income earned by assessee, to be considered as a taxable service under any ser....
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....eeks to tax service contracts simplicitior, and not other contracts. Applying the same principle in the facts of the present case it is evident that the Finance Act seeks to tax only such service, which are provided in relation to Real estate by a real estate agent. It does not contemplate taxing a transaction like the present one, which is for sale and purchase of immovable property and assuming without admitting, includes some alleged real estate service. In the absence of any statutory mechanism to tax the different element of an indivisible contract, in the aforementioned case, no service tax can be levied in the present case. The contention of the Ld. Commissioner that since the land cost is capable of being known, in the facts of the present case, the profit, if any, amounts to being the consideration for service, is completely erroneous. It have also been held in the said decision that when the Finance Act levies service tax, it only levy service tax on those activities which are for providing services simplicitor and it does not provide for levy of service tax on an indivisible transaction. 25. It is further submitted that if the contention of the Department is to b....
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....uarely covered under the definition of taxable service as a real estate agent, as defined in section 65(88) read with section 65(105) (v) of the Finance Act. 28. Ld. D.R. further submits, in the present case Sahara India through the MOU have engaged the appellant(s) for procuring land for their projects. The appellant being service provider agreed to provide the services as per the MOU. Further it is a matter of fact that the appellant was not involved in the sale and purchase of real estate in their own name at any given time. They were providing the services of connecting various land owners with Sahara India, after scrutinising the suitability of land, authentication of documents of title. Further the MOU entitled the appellant to keep the difference amount with them (average price of land as agreed minus the price of land as per the sale deed). Once it is established that the services were provided and due consideration for that has been received by the appellant, the liability for payment of service tax definitely arises. The terms of an MOU between two private parties cannot determine or circumvent the service tax liability, when it is apparent that consideration has ....
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....record, we find that there is no consideration defined and/or provided for the alleged service. In absence of any defined consideration for service, there is no contract for service. Under the facts and circumstances, we find that the appellant entered into an agreement of trading in land, wherein they agreed to transfer, a measurement or area of land, in a particular area in favour of the Sahara India. Such land was to be arranged by them by way of procurement from the land owners. The appellant was also obligated to examine the title of the prospective land owner and to further ensure the availability of land owner at the office of the Registrar for execution of the sale deed. In fact Sahara India instead of paying the price directly to the land owner, paid lump sum amount to the appellant. Thereafter the appellant identified the land, the seller, and after being satisfied with the title of the seller, entered into agreement with the seller and obtained power of attorney, in their favour. Thereafter the appellant transferred the land in favour of Sahara India. Thus, we find that the transaction is one of trading in land, appellant(s) may have surplus / profit or incur loss. ....
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....ed in every money flow. ... The factual matrix of the existence of a monetary flow combined with convergence of two entities for such flow cannot be moulded by tax authorities into a taxable event without identifying the specific activity that links the provider to the recipient. 12. ... Unless the existence of provision of a service can be established, the question of taxing an attendant monetary transaction will not arise. Contributions for the discharge of liabilities or for meeting common expenses of a group of persons aggregating for identified common objectives will not meet the criteria of taxation under Finance Act, 1994 in the absence of identifiable service that benefits an identified individual or individuals who make the contribution in return for the benefit so derived. 13. ... Neither can monetary contribution of the individuals that is not attributable to an identifiable activity be deemed to be a consideration that is liable to be taxed merely because a "club or association" is the recipient of that contribution. 14. ... To the extent that any of these collections are directly attributable to an identified activity, such fees or charg....