Custom, Excise & Service Tax Tribunal
Ajay Enterprises Pvt Ltd vs Delhi-Ii on 29 May, 2023
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO.1
Service Tax Appeal No. 50225 of 2017
(Arising out of order-in-Original No. DLI/SVTAX/002-COM/025/16-17 issued
under C. No. IV (16) Hqrs/ST/Adj/Ajay/30/2015/13317 dated 27.10.2016
passed by the Commissioner of Service Tax, Delhi-II, 5th Floor, 14-15 Farm
Bhawan, Nehru Place, New Delhi-110019)
Ajay Enterprises Pvt. Ltd. ....Appellant
th
8 Floor, Eros Corporate Tower,
Nehru Place, New Delhi-110019
Versus
The Commissioner of Service Tax, Delhi-II ....Respondent
5th Floor, 14-15 Farm Bhawan, Nehru Place, New Delhi-110019 APPEARANCE:
Shri A.K. Batra & Shri Akashdeep, Advocate for the Appellant Shri Ravi Kapoor, Authorized Representative of the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER NO._50763/2023__ Date of Hearing: May 29, 2023 JUSTICE DILIP GUPTA The order dated 27.10.2016 passed by the Commissioner of Service Tax Delhi-II1 confirming the demand of service tax proposed in the three show cause notices dated 19.11.20118 28.01.2019, 20.05.2014 for the period 2004-05 to 2007-08, 01.04.2008 to 30.09.2008 and 01.04.2012 to 31.05.2012 respectively under the category of „real estate agent‟ as defined under section 65(88) of 1 The Commissioner 2 ST/50225/2017 the Finance Act, 19942 and made taxable under section 65 (105)(v) of the Finance Act has been challenged in this appeal.
2. The appellant claims to be engaged in the business of construction and development of real estate projects and selling the same to buyers, but if the buyer subsequently transfers the ownership to some other person than the appellant charges certain amount towards „administrative‟ expenses. According to the appellant, this amount is charged for correcting the entries in the records of the appellant by substituting the name of the earlier buyer with that of the main buyer and are not towards „real estate agent‟ service.
3. The dispute in the present appeal relates to the „administrative charges‟ collected by the appellant. According to the appellant it is not required to pay any service tax under the category of real estate agent service, while according to the Department the appellant rendered real estate agent service. The Commissioner, in the impugned order, relied upon an earlier decision of the Tribunal dated 04.12.2015 in the appellant‟s own case in M/s Ajay Enterprises Pvt. Ltd. v/s CST, Delhi to confirm the demand.
4. It is not in dispute that the aforesaid order dated 04.12.2015 passed by the Tribunal has attained finality as the appeal filed by the appellant before the Supreme Court was dismissed as withdrawn.
5. What is, however, contended by the learned consultant appearing for the appellant is that the aforesaid decision of the Tribunal rendered on 04.12.2015 was subsequently distinguished in
2 Finance Act 3 ST/50225/2017 by various Benches of the Tribunal and in this connection learned consultant placed reliance on the following decisions:-
i. CST, New Delhi Vs M/s Ansal Properties and Infrastructures Ltd.3 ii. M/s Ansal Housing & Construction Ltd. Vs CST, New Delhi4 iii. M/s Bestech India Limited Vs Commissioner of Central Excise, New Delhi5
6. It is on the basis of the aforesaid decisions that learned consultant for the appellant submitted that the demand confirmed by the Commissioner needs to be set aside as the appellant had not provided real estate agent service.
7. Shri Ravi Kapoor, learned authorized representative appearing for the Department has however, supported the impugned order and has contended that the order passed by the Tribunal in the appellant‟s own case on 04.12.2015 should be followed and the appeal should be dismissed.
8. The contentions advanced by the learned consultant appearing for the appellant and the learned authorized representative appearing for the Department have been considered.
9. In order to appreciate the contention, it would be useful to first reproduce the definition of „real estate agent‟ as defined under section 65(88) of the Finance Act and it is as follows:-
65(88)- "real estate agent" means a person who is engaged in providing any service in relation to sale, purchase, leasing or renting of real estate and includes a real estate consultant".
10. Section 66(105)(v) of the Finance Act makes the said service taxable and said section was reproduced below:-
66(105)(v)- "Taxable service means any service provided or to be provided to any person, by a real estate agent in relation to real estate."
3. 2017 (9) TMi 1071-CESTAT, New Delhi 4 2017 (11) TMI 546-CESTAT, New Delhi
5. 2019 (3) TMI 867- CESTAT, New Delhi 4 ST/50225/2017
11. Real estate consultant is defined in Section 65(89) of the Finance Act and it is reproduced below:-
"65 (89) "real estate consultant" means 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;"
12. In the present case, the appellant has merely charged administrative charges/ transfer charges for incorporating in its record the name of the new buyer consequent upon any sale of the property by the earlier buyer. The appellant is not involved in any sale or purchase of real estate per se nor is the appellant involved in introducing the prospective buyer to any seller. The sale-purchase transaction takes place between two independent parties without the involvement of the appellant. It cannot, therefore, be urged that the appellant has rendered any real estate agent service.
13. In this connection it would be useful to refer to the decision of the Tribunal in Bestech India wherein the appellant, a real estate developer, had received administrative charges for change in name of the ownership in its records. After referring to the definition of „real estate agent‟, „real estate consultant‟ and „taxability of any service‟ provided by a real estate agent in relation to a real estate, the Tribunal referred to the earlier decision of the Tribunal in Ansal Properties and Infrastructure wherein the decision of the Tribunal rendered in the appellant‟s own case on 04.12.2015 in Ajay Enterprises was distinguished and reliance was placed on the decision of the Tribunal in Ansal Properties and Infrastructure. The relevant paragraphs of the decision of the Tribunal in Bestech India are reproduced below:-
5
ST/50225/2017 "8. In Ansal Properties Infrastructure Ltd., the Tribunal held that the transfer charges received by the appellant for permitting the transfer of land from one person to another cannot be taxed as „Real Estate Agent Service‟ and the relevant paragraph is reproduced below:
"10. The Revenue contended that the respondent received certain considerations for change of name of the owners of the flats, by way of substitution of the name by new buyer in place of earlier owner of the flat, was in relation to sale or purchase of such property and accordingly liable to service tax. To levy service tax first of all the provider of service should be a real estate agent and second while acting as such agent the person concerned should have provided service in relation to sale, purchase, leasing or renting of real estate. There is nothing in the show cause notice or the relied upon documents to show that the respondent acted in a capacity of "real estate agent" between the earlier owner and the new buyer of the flat. The changes made in the records of the respondent are not causative factors for such sale or purchase. We are in agreement with the observation of the Original Authority. In RIICO - 2017-TIOL-1725-CESTATDEL., the Tribunal held that the transfer charges received by the appellant for permitting the transfer of allotted land from one person to another cannot be taxed as real estate agent service because they were custodians of land and were dealing with the allottee on principal to principal basis, not as an agent of either party. We note that the reliance placed by Revenue on Ajay Enterprises Pvt. Ltd. vs. CST, Delhi- 2016 (42) STR 471 (Tri. Del.) = 2016-TIOL-580- CESTAT-DEL is not appropriate. In the said case it was admitted that the appellant was a real estate agent registered with the Department. Here in the present case the respondent is a real estate developer selling their constructed flats. They are dealing with the buyers, old or new, on principal to principal basis. Accordingly, we are in agreement with the 5 impugned order that no service tax liability can be confirmed against the respondent under the category".
9. In Ansal Housing & Construction Limited and MGF Developments Limited the Tribunal took the same view.
10. The Appellate Authority has completely failed to appreciate the contentions advanced by the appellant and committed an error in holding that the payment received by the appellant towards the administrative charges was as „Real Estate Agent Service‟. In fact, the Appellate Authority relied upon an interim order passed in the appeal filed by M/s MGF Developments Limited, which appeal was ultimately dismissed."
14. Since the decision rendered in the own case of the appellant rendered on 04.12.2015 has been considered and distinguished by subsequent Benches of the Tribunal and it has been held that real estate agent service is not provided in such circumstances it has to be held that the appellant has not rendered real estate agent 6 ST/50225/2017 service. It is, therefore, not possible to sustain the order passed by the Commissioner.
15. The order dated 27.10.2016 passed by the Commissioner is, accordingly, set aside and the appeal is allowed.
(order dictated and pronounced in the open Court) (JUSTICE DILIP GUPTA) PRESIDENT (RAJEEV TANDON) MEMBER (TECHNICAL) Rekha