TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1038
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....e also being engaged in provision of taxable services under the category of "Construction Residential Complex Services". The appellant is registered under the Finance Act, 1994 vide Registration bearing No.AACCT5039PSD001. 2.1. The appellant submitted that they purchase land from different land owners through "Sale Agreement". The appellant pays consideration to the land owner as fixed in the Sale Agreement. Under the sale agreement, the sale consideration payable to the land owner by the appellant is fixed. The appellant obtains "Power of Attorney" from the landowners to execute Sale Deed in favour of buyers of land, negotiate with buyers and obtain legal compliances required. The profit earned in purchase and sale of land is wholly retained by the Appellant, and no part of the profit earned by the appellant is shared with the land owner. The Department considered that the profit earned by them in the above transaction is related to rendering of "Real Estate Agent Service" by the appellant to the land owners and hence the appellant was held liable to pay Service Tax on the profit earned under the category of "Real Estate Agent Service". 2.2. As the appellant has not paid ser....
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....along with interest and penalty, against them, the appellant has filed the instant appeal. 3. The Ld. Counsel appearing on behalf of the appellant submits that the activities rendered by them amounts to Purchase and Sale of Land; that they have earned profit in the transaction of purchase and sale of land and the Land Owner does not pay any consideration to the Appellant. It was also informed that the appellant pays consideration for purchase of the land to the Land Owners; the transaction between the land owner and the appellant is on Principal-to-Principal basis. It is thus contended the findings of Ld. Commissioner in the impugned Order that the appellant has provided "Real Estate Agent Service" to the Land Owner as defined under section 65(88) read with Sec.65(89) and Sec.65(105) (v) of the Finance Act, 1994 is wholly illegal and arbitrary. 3.1. It is the appellant's submission that in the instant case, it is undisputed that - (i) The Sale Agreement is for purchase and sale of land and the Power of Attorney given is part of the Sale Agreement; (ii) There is no agreement between the Land Owner and the appellant to pay any agency commission, hence, there i....
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....wer of Attorney and that being the case there is no substance in the argument advanced by Ld. Commissioner. 3.5. In support of the above contention, the Ld. Counsel for the appellant relied upon the decision in the case of Ess Gee Real Estate Developers P. Ltd., Vs. Commissioner of C.Ex. reported in 2020 (34) GSTL 486 (Tri.-Del.) which has been upheld by the Hon'ble Supreme Court in Commissioner of C.Ex. versus Ess Gee Real Estate Developers P. Ltd. reported in 2020 (34) GSTL J93 (SC). 3.6. He also submitted that the same view has been held in the following cases as well: - i. Premium Real Estate Developers Versus CST reported in 2019(22) GSTL 373 (Tri.-Del.) ii. Elegant Developers Versus CST, reported in 2019 (29) GSTL 477 (Tri.-Del.) iii. CCE Versus Viraj Estates Pvt. Ltd. reported in 2017 (5) GSTL 386 (Tri.-Bom.) iv. Ghanshyam Vs. Yogendra Rathi reported in (2023) 7 SCC 361 v. Sanjeev Lal & Others Vs. CTT reported in (2015) 5 SCC 775 3.7. In view of the above decisions, it is the submission of the appellant that the demand of Service Tax, along with interest and penalty, confirmed in the impugned order is not sustainable. ....
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....t. 7.2. It is also observed that there is no agreement between the Land Owner and the appellant to pay any agency commission. Hence, we find that there is no consideration for provision of "Real Estate Agent Services" as alleged in the impugned order. In this transaction, we find that the buyers makes payment for the sale of land to the appellant. The land owners are not concerned with the sale consideration received by the appellant on sale of land to buyers. Under the "Sale Agreement" the purchase consideration payable to land owners is fixed. The land owners are not entitled to any part of the sale consideration received by the appellant from the buyer for onward sale of land to buyers. 7.3. For ready reference, the Salient conditions of the "Sale Agreement" dated 03-10-2010 entered into with Sri Gayadutt Pradhan & Sri Murari Pradhan (Land Owners) and the appellant are reproduced below:- Clause of the Agreement Details of condition Agreement between Parties is for sale and purchase of land (Page 62) Parties are "Seller" and "Buyer" (Page 62) That the parties have fixed the sale price of the land. 11 That the first party ha....
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.... development rights from owners and after extensive development etc., using his own finance to make the land/plot fit to be sold. Such activities are clearly beyond the scope of activities under by an agent. Merely keeping ownership rights by Land Owners till end for purpose of easy transfer of title to ultimate buyer would not make Appellant a Real Estate Agent or even Real Estate Consultant . The relevant observations of the Tribunal in the aforesaid decision are reproduced below: - "25. The submission of Learned Authorized Representative of the Department that the show cause notice proceeds to require the appellant to explain why service tax should not be levied on "real estate agent" service can also be examined by treating the "real estate agent" service as the essential character of the services. The show cause notice states that this was the "prime service" rendered to the appellant. 'Real estate agent' has been defined in Section 65(88) of the Act to mean a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting of real estate and includes a real estate consultant. The "taxable service" is the service provided to any person ....
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....7-10-1998/TRADE NOTICE NO. 7/98-S.T., DATED 13-10-1998, MUMBAI COMMISSIONERATE 8.1 (i) As per Section 65(35), "real estate agent" means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant. Section 65(36) defines a "real estate consultant" to mean any person who renders in any manner, either directly or indirectly, advice, consultancy, or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate. 8.2 (ii) The rate of service tax on realty service is 5%. It may be noted that some international realty concerns, such as Richard Ellis, Colliers and Jardine etc. have opened shop in India and they are providing comprehensive realty services. Apart from the traditional services in respect of sale/purchase/leasing of real estate, such concerns are, inter alia, providing services to real estate developers and promoters in respect of evaluation of a proposed real estate scheme/project by conducting techno-economic studies, providing feasibility ....
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.... of the record that such services are rendered. As already stated hereinabove that the appellant herein has not rendered any of the services. On the contrary, he envisaged conceptualized developed, implemented and marketed the scheme/project for himself which is evident from the contract entered by the appellant with the special purpose vehicles. We are of the view that the amount received by the appellant as development charges which are nothing but in the form of profit, will not get covered under the category of real estate agent services". (emphasis supplied) 28. It is however, sought to be contented by Learned Authorized Representative of the Department that a 'real estate agent' has been defined to include a 'real estate consultant' and a 'real estate consultant' has been defined in Section 65(88) of the Act to mean a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate. It has, therefore, been urged that the service rendered by the app....
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....hat Sahara India had agreed to procure land at the aformentioned locations, at the fixed average rate per acre, which included all the cost of land, development expenses (items). The obligations of the appellant under the MoU were - (a) divide and demarcate the entire land into the blocks of 20 to 30 acres, (b) purchase the land in contiguity block-wise, (c) furnish title papers and other necessary documents for the land 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 ....
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....tivity has actually not being quantified in the MoU. The MoU provides that "the difference, if any, of the amount being actually paid to the owner of the land and the average rate shall be payable to the second party (appellant). It is very clear from the provision of the MoU that the amount payable to the appellant is not quantified and it is more of the nature of a margin and share in the profit of the deal in purchase of land. We feel that for levy of service tax, a specific amount 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 agr....
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....c remuneration has not been fixed in the deal for acquisition of the land we are of the view that both the parties have worked more as a partner in the deal rather than as an agent and the principle, therefore we are of view that taxable value itself has not acquired finality in this case." 7.7. We also refer to the decision in the case of Elegant Developers Versus Commissioner of Service Tax, Delhi reported in 2019 (29) GSTL 477 (Tri.-Del.), wherein the assessee procured land from Land Owner and entered into an Agreement for transfer of land to Sahara India; no specific remuneration was fixed for providing any Agency Services. Both the parties worked on principal-to-principal basis. No specific remuneration had been agreed between the Land Owner and the assessee for provision of any Agency Services. In absence of consideration or remuneration for any agency service, the transaction was held to be on a principal-to-principal basis. It is trading in land and accordingly, it has been held that no service tax is payable on the profit earned in the purchase and sale of land. The relevant portion of the said decision is reproduced below: - "31. Having considered the rival co....
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....ot 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 as a consideration for a service. The relevant observations of the Tribunal in this regard are extracted below : "11. ...Consideration is, undoubtedly, an essential ingredient of all economic transactions and it is certainly consideration that forms the basis for computation of service tax. However, existence of consideration ....
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....hority in the impugned order has gone into four agreements/transactions entered into by respondent from time to time and after analyzing the said clauses in the agreement came to a conclusion that these are of in respect of sale and purchase of land and TDR. The findings of the first appellate authority are in paragraph 8.3 which are relevant and are reproduced. "8.3 On mere reading of the contents of the four agreements mentioned in para 7 above, it is lucid that the transactions amount the appellant, Pawar family, M/s. Shriram Hi-Tech Steel & Power Pvt. Ltd., Shri Ambika Ispat (India) Pvt. Ltd. Shree Banke Bihari Ispat Pvt. Ltd. and M/s. Great Fortune Investment & Infrastructure Pvt. Ltd. have been with regard to sale and purchase of development rights and final sale of immovable property wherein no service from the appellant as real estate agent was involved. There is no evidence that the appellant provided any service of any development in respect of property of Mr. Pawar's family as is alleged in the show cause notice and held in the order-in-original. On the contrary it is evident that the appellant has always acted as purchaser and seller of [development] rights and....