TaxTMI 
TaxTMI 
2024 (10) TMI 567
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.... (MOU) with M/s.India Affordable Housing Solution [IAHS] on 30.07.2009 as the later was specialized in market analysis, research and identification of reputed builders/developers. M/s. IAHS does not construct any house itself, rather identifies builders or developers on behalf of respondent. 2.2 Based on builders recommended by M/s. IAHS and analysis of market demand, respondent selected the suitable builder for bulk booking of the residential flats in 2009. During the disputed period, the respondent executed two MOUs with M/s.Apt Infrastructure Pvt. Ltd. and M/s. Supertech Limited. 3. The modus operandi of the respondent's business as explained is as under:- 3.1 The respondent book flats with the builders in bulk upon payment of earnest money to them and sells such flats to the Government officials. As per the terms of MOU, there is a lock in period of three to six months within which the respondent shall have the rights on the flats booked by it and if it failed to sell the flat/units within the prescribed lock in period, the builder will forfeit the earnest money deposited by the respondent for the booking of flats. 3.2 After booking flats with the builder, the respo....
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....adjudicated vide the impugned order, whereby the entire demand was dropped by the Department holding that the respondent while executing the aforesaid activities is not covered under the ambit of Real Estate Agent's services because it is not carrying out any activity specified therein. They are mainly engaged in purchase and sale of units in various projects and they are not providing any service to their buyers. 6. Heard Shri S.K.Ray, Authorised Representative for the Department and Shri A.K. Batra, learned counsel for the respondent. 7. According to the Revenue, the respondent arranges blocks of residential flats from various builders and thereafter, by selling these flats to individuals, they act as an intermediary/facilitator between the builder and the end customers, thereby earning income from the difference between the buying and selling prices of the flats. The respondent introduces the end user customers to the builder companies and assist them in finding their desired accommodation. The respondent is not a purchaser of the flat but acts as a confirming party in the agreements, which indicates that they are involved in the transaction to help the customers and build....
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....enefit tantamounts to transfer of land itself, as correctly observed by the learned Adjudicating Authority in its order. (b) The respondent operates on a principal-to-principal basis, assuming the risks and rewards of the transaction, evidenced by the margin or loss incurred between the advance paid to the builder and the payment received from the ultimate buyer, thereby characterizing the transaction as a sale rather than a provision of service. In other words, there is no service provider-recipient relationship between the respondent and the ultimate buyer/the builder." 8.6 The extended period of limitation is not invocable as the issue involved relates to interpretation and there was no suppression and malafide intent to evade service tax. Thus, the demand amounting to Rs.2,04,16,392/- for the period 2009-10 to 30.09.2012 is barred by limitation. 9. The Adjudicating Authority, on merits formulated the following questions for consideration:- "A. Whether the income earned by the noticee from the foresee transaction of selling allotment rights in respect of selling flats to buyers is exigible to service tax? B. Whether amount charged in the name of ....
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....ry to the main activity. No sale-purchase transaction is completed without other necessary formalities. In order to fructify the final sale of flats, the appellant is required to carry out the incidental jobs, which are inbuilt and part and parcel of the main activity and are, therefore, not classifiable as separate services under the heading "Real Estate Agent/Real Estate Consultant". 13. On examining the terms and conditions under the MOU, we find 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. 14. We find that the Adjudicating Authority in holding that the appellant while executing the aforesaid activities, is not cove....
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....e in the amount which the appellant paid to the builder and what is collected from the customers cannot really be termed as 'commission'. 17. The allegation in the show cause notice is that the services rendered by the respondent with effect from 01.07.2012 to 31.03.2014, is not covered under the negative list of services nor any exemption is available to the activities carried out by the appellant and, therefore, the service tax is leviable under Section 66B of the Act which reads as under:- "Section 65B (44): "Service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) An activity which constitutes merely,-- (i) A transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution; (iii) a transaction in money or actionable claim; (b) A provision of service by an employee to the employer in the course of or in relation to his employment; (c) Fees ....
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....gets an amount as a commission. Considering the facts in that case, the Tribunal found that the appellant envisaged conceptualized developed, implemented and marketed the scheme or project for himself and the development charges were only in the form of profit. Therefore, they were held to be not covered under the category of "real estate agent services". 20. Following the decision in Saumya Construction (supra), the Principal Bench in Ess Gee Real Estate Developers Pvt. Ltd. (supra), 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 ....
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....e nature of margin (profit/loss). We hold that for levy of service tax, a specific amount (consideration for service) has to be agreed between the service recipient and the service provider. As no fixed amount has been agreed in the MoU which have been signed between the parties, the amount of the remuneration for service, if any, is not clear in this case. In this regard, we also take shelter of this Tribunal's decision in the case of Mormugao Port Trust v. CC, CE&ST, Goa - 2017 (48) S.T.R. 69 (Tri. - Mumbai). The relevant extract is reproduced here below :- "18. In our view, in order to render a transaction liable for service tax, the nexus between the consideration agreed and the service activity to be undertaken should be direct and clear. Unless it can be established that a specific amount has been agreed upon as a quid pro quo for undertaking any particular activity by a partner, it cannot be assumed that there was a consideration agreed upon for any specific activity so as to constitute a service. In Cricket Club of India v. Commissioner of Service Tax, reported in 2015 (40) S.T.R. 973 it was held that mere money flow from one person to another cannot be considered ....
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....ithout the involvement of the land owners. The sale deed was ultimately executed by the land owners and not by the appellant and therefore it was held that the appellant had acted as a middleman or agent in the purchase and sale of immovable property and the amount received is consideration for such services. 24. On the second issue of amount charged by the respondent in the name of 'Demand Survey', we find 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. We agree with the findings arrived at 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 as under:- "7.1 Some of the application forms for "Demand Survey" as submitted by the notice are attached as RUD-54. The perusal of the forms clearly indicates that the notice takes the service activities relates to real estate and unde....