TaxTMI 
TaxTMI 
2025 (11) TMI 518
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.... of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994? 37 F. CONCLUSION 42 1. Heard. 2. The Commissioner of Service Tax, New Delhi [Hereinafter, being referred to as "appellant or Commissioner".] has filed these statutory appeals under Section 35L(b) of the Central Excise Act, 1944, assailing the common judgment and final order Nos. 53602-53605 of 2018 dated 21st June, 2019, passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi [Hereinafter, being referred to as "Appellate Tribunal".] in Service Tax Appeal Nos. 50119-50120 of 2014. 3. The M/s Elegant Developers, 1-C, Beli Road, Allahabad, Uttar Pradesh ["respondent".] was issued a Show Cause Notice dated 22nd April, 2010 by the Commissioner and pursuant to the adjudication thereof, the Commissioner vide order dated 30th September, 2013, imposed a penalty and demand of tax against the respondent in the following terms: "49. In view of the aforesaid discussion and findings, I pass the order as under:- ORDER 1. I confirm the demand of Rs. 10,45,61,837/- (Rupees Ten Crores Fourth Five Lakhs Sixty One Thousa....
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....rporation Ltd. ["SICCL".] for the acquisition, development and management of land parcels for its real estate project at Sahara City Homes, Sri Ganganagar (Rajasthan), Vadodara (Gujarat), and Kurukshetra (Haryana) respectively. 7. The salient features of the MOUs germane for the adjudication of the present appeals, are as under: i. SICCL agreed to pay the respondent a 'fixed average rate' per acre of land, which was to be identified, divided, and demarcated by the respondent, along with complete documentation and other related formalities and the fixed average rate was to be determined as follows: - Place/Sites Date of MOU Area of the land (in acre) Fixed Average rate per acre (in Rs.) Vadodra 25^th December, 2002 146.84 12,40,000/- Sriganganagar 30^th December, 2004 112.46 15,65,000/- Kurukshetra 17^th August 2005 150 38,45,000/- ii. SICCL had agreed to purchase land at afore-mentioned locations, at the fixed average rate per acre, which included the entire cost of the land as well as the development expenses. iii. As per the MOU, the respondent was responsible to carry out the following specific tasks: ....
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....-08, as well as copies of agreements entered into with various companies for providing services in relation to real estate. 9. Upon perusal of the statements of the authorized representative of SICCL as well as the respondent, the Directorate General, prima facie, concluded that the respondent squarely fell within the purview of a 'Real Estate Agent' as defined under Sections 65(88) and 65(89) of the Finance Act, 1994, and had wilfully suppressed the fact of rendering taxable services to its client from 1st October, 2004, onwards from the jurisdictional Service Tax authorities. 10. Accordingly, the Directorate General issued a Show Cause Notice dated 22nd April, 2010, to the respondent requiring it to show cause why Service Tax totalling Rs. 10,28,81,379/- (Rupees Ten Crore Twenty-Eight Lakh Eighty-One Thousand Three Hundred Seventy-Nine Only) for the period from 1st October, 2004, to 31st March, 2007, may not be charged and recovered from the respondent under the proviso to Section 73(1) of the Finance Act, 1994. The notice further called upon the respondent to explain why penalty should not be imposed upon it under the relevant provisions of the Finance Act, 1994. The notic....
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....e nature of those performed by a 'Real Estate Agent/Real Estate Consultant' and therefore, the respondent would squarely fall within the scope of Sections 65(88) and 65(89) of the Finance Act, 1994. The Commissioner further held that the fixed average rate, as stipulated in the MOUs, included the profit margin of the respondent, and such profit constituted consideration received for rendering services in relation to purchase, registration, and allied activities of land for SICCL, thereby attracting levy of service tax. Accordingly, the consideration received by the respondent was held liable to service tax in terms of Section 65(105)(v) of the Finance Act, 1994. 16. The Commissioner also concluded that the respondent suppressed the fact of rendering taxable services to its client from 1st October, 2004, onwards; failed to obtain service tax registration as 'Real Estate Agent'; and failed to file the prescribed ST-3 returns under the Service Tax Rules, 1994 thereby entitling the Directorate General to invoke the extended period of limitation by virtue of proviso to Section 73(1) of the Finance Act, 1994. It was further observed that, had the Directorate General not initiated the ....
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....earned counsel for the appellant, drew the Court's attention to the fact that the title to the concerned lands rested solely with the individual owners, and at no point of time the respondent ever gained ownership of the said lands, a position further fortified by the fact that the respondent merely obtained Powers of Attorney from the individual landowners and subsequently transferred the said lands to SICCL. 24. It was thus projected on behalf of the appellant that the respondent acted as a mere facilitator for sale of lands to the benefit of SICCL, earning a commission on amounts exceeding the fixed average rate under the MOUs, thereby qualifying as a 'Real Estate Agent' under Section 65(88) of the Finance Act, 1994, and thus the services rendered by the respondent against the MOUs were unquestionably taxable under Section 65(105)(v) of the Finance Act, 1994. 25. Shri Bharathi relied upon a judgment of the High Court of Chhattisgarh at Bilaspur in Chhattisgarh Steel Castings (P) Ltd. v. Union of India 2020 (34) G.S.T.L. 70., and contended that in a similarly situated case, the High Court held that a transaction cannot be regarded as a mere sale and purchase of immovable pr....
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....t deliberately suppressed facts with intent to evade tax, in order to invoke the extended period of limitation of five years. Mere non-payment of tax does not constitute suppression, nor does the law impose any obligation upon the respondent to seek clarification regarding applicability of service tax. E. ANALYSIS 30. Having given our thoughtful consideration to the submissions advanced at bar and upon perusal of the impugned judgment and order and the materials placed on record, following issues fall for our consideration: i. Whether the respondent rendered services falling within the category of 'Real Estate Agent', taxable under Section 65(105)(v) read with Section 65(88) of the Finance Act, 1994, during the period from 1st October, 2004 to 31st March, 2007? ii. Whether the appellant has established that the respondent deliberately suppressed facts, thereby justifying the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994? I. Whether the respondent rendered services falling within the category of 'Real Estate Agent', taxable under Section 65(105)(v) read with Section 65(88) of the Finance Act, 19....
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....other necessary documents with reference to the land proposed, within 15 days from the date of signing of the MOU. 10.3 Thereafter the appellant shall obtain and furnish, each and every other necessary permission/ approval from the Government body/competent authority, or other regulatory authority, required for transfer of the land proposed, and further arrange for the purchase of land proposed under the MOU, at the average agreed rate per acre, within two months or within such further time at the discretion of Sahara India. 10.4 All expenses for obtaining proof of title and approval (except for ULC clearance) required for the transfer of title in the land shall be borne by second party, that is the appellant, and all the supporting documents furnished in respect thereof shall reflect the latest position of the ownership of land. 10.5 Thereafter scrutinising the papers relating to title, the first party-Sahara India shall enter into an agreement of sale with the owners of the land, after payment of advance/signing amount, in favour of the cultivators/owner of the land. 10.6 Thereafter having completed and covered the entire land(area) under the M....
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....ate and to do the work of Pairvi in respect thereof in the concerned offices and shall provide to Sahara India all necessary help so as to get the work of mutation completed." 34. For a person to qualify as a real estate agent, there has to be a contract of agency, to be specific, an estate agency agreement. Expanding the definition of 'Real Estate Agent' under Section 65(88) of the Finance Act, 1994, it becomes clear that, in order to fall within its ambit, an individual or the entity must be engaged in rendering a service and such service must be in relation to sale, purchase, leasing or renting of a real estate and includes a real estate consultant. 35. The phrase 'Real Estate' is not expressly defined under the Finance Act, 1994, but according to the Oxford English Dictionary, the expression denotes property in the form of land or buildings, and may additionally refer to the business of selling houses or land for building. 36. Moreover, Section 2(zn) of the Real Estate (Regulation And Development) Act, 2016 defines 'real estate project' to mean: "the development of a building or a building consisting of apartments, or converting an existing building or a part ....
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....ICCL and the respondent. The MoUs simply referred to a fixed rate per plot which SICCL would pay to the respondent for every chunk of the land provided by the respondent to SICCL. There was no element of any service charges or consultancy charges being levied by the respondent on such sale transactions. The gains accruing to the respondent would arise from the difference of sale consideration over and above the fixed sale price settled in the MoUs. For this purpose, the respondent would be required to negotiate with the original landowners and facilitate the transfer of the lands to SICCL. It is noteworthy that there existed a probability of the respondent even suffering losses in the transaction if the value of the land exceeded the fixed price agreed upon in the MoUs. This would not be possible if the contract was for providing services based on commission or in any other form. 41. Thus, we are of the firm opinion that the Appellate Tribunal did not commit any error in holding that the respondent did not act as a real estate agent or a consultant while acting in furtherance of the MoUs entered with SICCL. The profitability of the respondent was contingent upon the rate at whic....
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....respondent, thereby justifying the invocation of extended period of limitation by the Directorate General under the proviso to Section 73(1) of the Finance Act, 1994. 47. The proviso to Section 73(1) of the Finance Act, 1994 provides for the recovery of service tax not levied or paid or short-levied or short-paid under circumstances where the normal limitation period has expired. While the general period of limitation is eighteen months from the relevant date, the proviso to Section 73(1) permits recovery beyond this period when there is deliberate suppression of facts or mis-statement by the service recipient or provider. The provision is therefore intended to deal with cases of intentional concealment, ensuring that taxpayers do not escape liability by withholding material information or misrepresenting facts that would affect the determination of tax. 48. It is trite that for invocation of extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, the appellant was required to prove deliberate suppression and concealment of the material facts on the part of the respondent to evade the tax liability. 49. Recently, this Court in Stemcyte In....