Custom, Excise & Service Tax Tribunal
R.K. Builders, vs Ce & Cgst Lucknow on 2 August, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.1784 of 2011
(Arising out of Order-in-Original No.10/Commissioner/LKO/ST/2011-12 dated
09/08/2011 passed by Commissioner of Central Excise & Service Tax,
Lucknow)
M/s RK Builders, .....Appellant
(485/21-B, Lakarmandi, Daliganj, Lucknow)
VERSUS
Commissioner of Central Excise &
Service Tax, Lucknow ....Respondent
(7A Ashoka Marg, Lucknow) APPEARANCE:
Shri Dharmendra Srivastava, Chartered Accountant & Shri Suhail, Advocate for the Appellant Shri Manish Raj, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70495/2024 DATE OF HEARING : 09 April, 2024 DATE OF PRONOUNCEMENT : 02 August, 2024 SANJIV SRIVASTAVA:
This appeal is directed against order in original No 10/Commissioner/LKO/ST/ 2011-12 dated 09.08.2011 of the Commissioner Central Excise and Service Tax, Lucknow. By the impugned order followings has been held:
"ORDER
1. I confirm the demand of ₹53,31,786/- (Rupees Fifty three Lakhs Thirty One Thousand Seven Hundred Eighty Six Only) against M/s R. K. Builders, 485/21-B, Lakarmandi, Daliganj, Lucknow under Section 73(1) of the Finance Act, 1994 alongwith interest at appropriate rate under Section 2 Service Tax Appeal No.1784 of 2011 75 of the Act ibid. The aforesaid amount should be paid hence forth.
2. I drop the demand of ₹64,45,223/- (Rupees Sixty Four Lakhs Forty Five Thousand Two Hundred Twenty Three Only) against M/s R. K. Builders 485/21-B, Lakarmandi, Daliganj, Lucknow.
3. I impose a penalty of ₹200/- for each day from the commencement of service till the date of taking registration under Section 77(1) (a) of the Finance Act, 1994 upon M/s R. K. Builders, 485/21-B, Lakarmandi Daliganj, Lucknow for not taking registration under Service Tax law
4. I also order for recovery of late fee of ₹12,000/ (Rupees Twelve Thousand Only) from M/s R. K. Builders, 485/21-B, Lakarmandi Daliganj, Lucknow for not filing prescribed ST-3 returns under erstwhile Section 70 of the Finance Act, 1994
5. I impose a penalty of ₹53,31,786/- (Rupees Fifty three Lakhs Thirty One Thousand Seven Hundred Eighty Six Only) upon M/s R. K. Builders, 485/21-B, Lakarmandi, Daliganj, Lucknow under Section 78 of the Finance Act, 1994.
6. I do not impose any penalty under Section 76 of the Finance Act,1994 upon M/s R. K. Builders, 485/21-B, Lakarmandi, Daliganj, Lucknow."
2.1 Appellant is a partnership firm. They entered into agreements / Memorandum of Understanding with M/s Sahara Commercial Corporation Ltd., Lucknow (SICCL) and M/s Sahara India, Lucknow (Sahara) for the acquisition, development & management of its real estate project at Sahara City Homes, Lucknow (U.P.).
2.2 On the basis of a specific intelligence that Appellant is engaged in providing various services to M/s SICCL and M/s Sahara, relating to the acquisition and development of their real estate project at Sahara City Homes, Lucknow & Hardoi (U.P.) 3 Service Tax Appeal No.1784 of 2011 and that they have received huge amounts as consideration, in lieu of providing these services but they have not paid Service Tax thereon, investigations were undertaken by the revenue authorities.
2.3 On the basis of examination of documents tendered by the appellant during the course of investigations and also on the basis of various statements recorded revenue authorities were of the view that the service provided by the appellant to M/s SICCL and M/s Sahara were appropriately classifiable under the category of taxable services under headings to 'real estate agent' 'real estate consultant' services and appellant should have discharged service tax on these services.
2.4 On the basis of investigations undertaken, it was opined that appellant had short paid service tax as detailed below:
(in ₹) S. Period Value of Taxable Value of taxable Services (site Total Value of No services (Real Estate formation & clearance, excavation taxable services Agent services) and earthmoving and demolition )
1. 01.10.04 to 17.04.06 3,44,32,551/- -- 3,44,32,551/-
2. 18.04.06 to 22.05.07 1,98,03,850/- 4,77,19,750/- 6,75,23,600/-
Total 5,42,36,401/- 4,77,19,750/ 10,19,56,151/-
Treating the abovementioned amounts as cum-Service Tax, the Service Tax & Education Cess leviable at the prevalent rates at different periods has been worked out as below :-
Period Value of Taxable Rate Service Tax Edu. Total Taxable Value s of Cess services / S. Cum S.Tax Tax& Value Edu.
Cess
01.10.2004 3,44,32,551 3,09,20,43 10% 34,43,255 68,865 35,12,120
to 1 +
17.04.2006 2%
18.04.2006 6,75,23,600 5,92,58,71 12% 81,02,832 1,62,05 82,64,889
to 1 + 7
22.05.2007 2%
Total 10,19,56,15 9,01,79,14 1,15,46,08 2,30,92 1,17,77,00
1 2 7 2 9
4 Service Tax Appeal No.1784 of 2011
Thus total Service Tax evaded by Noticee comes to
₹1,17,77,009/- (Service Tax ₹1,15,46,087/- + Edu. Cess
₹2,30,922/-) during the period 01.10.2004 till 22.05.2007.
2.5 Revenue was of the view that appellant had suppressed the fact of rendering taxable services during the period 01.10.2004 onwards, to their clients from the jurisdictional Service Tax authorities. They never filed the Service Tax returns in the form ST-3 as prescribed in the Service Tax Rules, 1994 and under Section 70 of the Act ibid, for the period 01.10.2004 onwards, to disclose wholly and truly all the material facts viz services provided by them, the gross amount received by them for rendering the taxable service necessary for their assessment. The appellant deliberately with intent to evade payment of Service Tax did not disclose the material facts.. The provisions of Section 73(1) of the Finance Act, 1994 for the extended period of limitation thus appears to be invokable. The interest at appropriate rate on the said amount of Service Tax and Education Cess also appears to be recoverable from Noticee under Section 75 of the said Act, and for various acts of omission or commission leadings to contravention of various [provisions of the law appellants are liable to penal action.
2.6 A Show Cause Notice dated 19.04.2010 was issued to appellant asking him to show cause as to why:-
i. Service Tax totally amounting to ₹1,17,77,009/-
(Rupees One Crore Seventeen Lakhs Seventy Seven Thousand Nine Only) (Service Tax ₹1,15,46,087/- + Education Cess ₹2,30,922/-) should not be recovered from them under proviso to Section 73(1) of the Finance Act, 1994;
ii. The interest at the appropriate rates should not be recovered from them under Section 75 of the Finance Act, 1994;
iii. Penalty should be imposed upon them under Section 76 of the Finance Act, 1994 for not paying Service Tax in accordance with the provisions of Section 68 of the 5 Service Tax Appeal No.1784 of 2011 Finance Act, 1994 and Rules made thereunder as mentioned above;
iv. Penalty should not be imposed upon them under Section 77 of the Finance Act, 1994 for violation of Section 69 and 70 of Finance Act, 1994 by not making an application to the concerned Superintendent of Service Tax for Registration under Service Tax within 30 days from the date on which the Service Tax under Section 66 of the Finance Act, 1994 was levied and also for not filing the statutory returns with the competent authority of Service Tax for the said services rendered by them;
v. Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 in as much as they have failed to discharge their Service Tax liability to the exchequer by suppression of facts, with an intent to evade payment of Service Tax.
2.7 Show cause notice has been adjudicated as per the impugned order. Aggrieved appellants have filed this appeal.
3.1 We have heard Shri Dharmendra Srivastava, Chartered Accountant and Shri Md. Suhail, Advocate for the appellant and Shri Manish Raj Authorized Representative for the revenue.
3.2 Arguing for the appellant learned Chartered Accountant submits that at the time of hearing on 07.02.2020 they have submitted the request for decision in the present case on merits and on the basis of decision of Delhi Bench in case of Premium Real Estate Developers [Final Order No 53322-53323/2018 dated 27.11.2018.
3.3 Arguing for the revenue learned authorized representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 Impugned order records findings as follows:
".... The issues for determination before me are as under :-
6 Service Tax Appeal No.1784 of 2011
1. Whether Service Tax amounting to ₹1,17,77,009/-
inclusive of Education Cess alongwith interest is recoverable from the Noticee or not under proviso to Section 73(1) of Finance Act, 1994.
2. Whether penalty under Section 76, 77 & 78 is imposable upon them or not?
The above issues are taken up for discussions as under :-
1. Whether Service Tax amounting to ₹1,17,77,009/- inclusive of Education Cess is recoverable from the Noticee or not under proviso to Section 73(1) of Finance Act, 1994.
The Show Cause Notice alleges that the noticee have entered into memorandum of understanding dated 19.06.2003 with M/s Sahara India Commercial Corporation Ltd., Lucknow and M/s Sahara India, Lucknow for acquisition, development and management of real estate project for 100 to 150 acres of land in and around the city of Lucknow. Show Cause Notice further alleges that payments have been given in the land purchase head and also for the specific land development work. The Noticee stated that M/s Sahara agreed to pay at average rate of ₹14 lacs per Acre in Lucknow which is inclusive of profit The Noticee have entered into another memorandum of understanding dated 24.11.2003 with Ms Sahara India Commercial Corporation Ltd. Lucknow & M/s Sahara India, Lucknow and Noticee for acquisition Jevelopment and management of real estate project for 100 to 150 Acres of land in and around the city of Hardoi. Show Cause Notice further alleges that payments have been given in the land purchase head and also for specific land development work. Further M/s Sahara India has agreed to pay at average rate of ₹8.5 lacs per Acre in Hardoi which is inclusive of profit Further Noticee vide their letter dated 22.06.2010 has requested to clarify the calculation of 7 Service Tax Appeal No.1784 of 2011 value of taxable service & Service Tax in para 14.2 and para 15 of Show Cause Notice. They further sought clarification that as per para 16 of $how Cause Notice it was mentioned "the total Service Tax evaded by M/s Balaji" then whether the demand pertains to them or to "M/s Balaji". The clarification received from the investigating agency i.e. Director General of Central Excise Intelligence (DGCEI in short) vide their letter No. DGCEI/KRU/INV/17/09/1396 dated 26.11.2010 clarifying the above issues were given to Noticee, as desired by them. In the aforesaid letter of DGCEI has clarified that the amounts received prior to 01.10.2004 as per RUD No.10 & 11 has not been taken into account for demanding Service Tax and the amounts received on or after 01.10.2004 only have been taken into consideration / account for issuance of demand.
Thus Noticee's contention vide their letter. dated 21.10.2010 that entire demand was time barred being period prior to November'2003 is factually incorrect & hence not acceptable to me.
They further stated that their activity of sale & purchase of land is not taxable under the category of Real Estate Agent and no tax can be levied or collected on the value / cost of land. They further contended that the taxable value has been wrongly calculated in the Show Cause Notice as the cost / value of land has been included in the taxable value by alleging that sale of land is not covered in exclusion clause of Section 67 of Finance Act, 1994 prior to 18.04.2006. Further regarding non applicability of Notification No. 12/2003-ST dated 20.06.2003 on the ground that land cannot be treated as goods, they have stated that aforesaid contention of DGCEI is not correct & value of land cannot be subjected to Service Tax In the present case, I find that there is no dispute that M/s Sahara India Commercial Corporation Ltd. agreed to pay 8 Service Tax Appeal No.1784 of 2011 ₹14 lacs per acre to Noticee for purchase of land at Lucknow and ₹8.5 lacs per Acre for purchase of land at Hardoi and the aforesaid amount is inclusive of profit.
The definition of Real Estate Agent under Section 65(88) of Finance Act, 1994 is as under :-
""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".
Further Section 65(89) of the said Act specifies that "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, constructions implementation, supervision, maintenance, marketing, acquisition or management, of real estate.
In view of the above definition I find that the activities of Noticee regarding purchase of land at Lucknow & Hardoi for M/s Sahara India Commercial Corporation Ltd. & M/s Sahara India for a consideration, is very well covered under the Real Estate Agent services. I find that Noticee have undoubtedly offered their services to M/s Sahara group by procuring / arranging land and its purchase and subsequent registry as per agreement with Sahara group. Further the consideration in the form of commission or profit received from M/s Sahara group is liable to Service Tax. Further Noticee's contention that cost/ value of land cannot be included in the gross value for levy of Service Tax is acceptable to me, as I find that as per Section 65(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'. This would apparently mean that tax is leviable on the service component relatable to the sale & purchase of property and not on the property (real estatè) itself. Further, Notification No. 12/2003-ST 9 Service Tax Appeal No.1784 of 2011 provides exclusion of sale value of goods, provided there is a documentary evidence for the same. Show Cause Notice alleges that benefit of the aforesaid Notification is not available to the Noticee as land is immovable property and does not fall in the category of goods. However I find the principle that Service Tax can't be levied on the sale consideration of goods is fundamental to the levy thereof because taxation of sale of goods including immovable property viz. land, is a State subject. Therefore, no Service Tax is leviable on the value of land, which is subjected to stamp duty under State law. Further taxable value under the provisions of Section 67 (1) (i) of the Finance Act, 1994, shall be the gross amount charged by service provider for such service provided or to be provided. Therefore, I find that the word "for such service' means any sum received for other than service shall not form part of the taxable value. Thus only brokerage / commission / profit received by real estate agent is taxable. Further I find that average cost of land @ ₹14 lacs per acre & ₹8.5 lacs per Acre for Lucknow & Hardoi project respectively was inclusive of profit of the Noticee as per memorandum of understanding & the aforesaid profit is liable to Service Tax because the said profit is consideration received by Noticee for providing services in respect of purchase & registry etc. of the land for M/s Sahara India Commercial Corporation Ltd., & M/s Sahara India.
Further as per Memorandum of understanding entered into between M/s Sahara India Commercial Corporation Ltd. (1st Party) and Noticee (2nd Party) on 19.06.2003, some of terms & conditions are as under:-
1. Clause 8 of MOU " that on having completed & covered the entire land under the MOU through agreement to sell, the second party shall thereafter get the sale deeds executed by Kashtkar / Owner of
10 Service Tax Appeal No.1784 of 2011 the land in favour of the 1st party or its nominees after payment of remaining amount towards consideration"
2. Clause 10 "In case any dispute is pending before Civil Court or Revenue court regarding title, share or for partition of the property, the 2 party will try its best to get the settlement achieved amongst the co- sharers / co-owners and agreement to sell shall be executed accordingly"
3. Clause 11 "that the 2nd party shall be responsible for bringing the cultivators to the Registrar office alongwith requisite number of copies of their photographs, certify their identify and to; witness the execution / registration of the documents".
4. Clause 17 "All expenses relating to mutation of land through and in the office of the concerned Revenue Authority shall be borne by the 1st party and the 2nd party shall co-ordinate and do the work of pairavi in respect thereof with the concerned offices and shall provide to the 1st party all necessary help so as to get these works completed within a stipulated period"
The above mentioned terms & conditions specifying the work to be undertaken by 2nd party i.e. Noticee, falls under the ambit of 'Real Estate Agent' service without any shadow of doubt.
Further I find that similar terms & conditions are present in the other memorandum of understanding dated 24.11.2003 entered between M/s Sahara India & Noticee for purchase of land at Hardoi and all such activities mentioned in MOU undoubtedly falls under the category of Real Estate Agent Service head.
Noticee vide their letter dated 21.02.2011 received on 16.03.2011 produced a chart in Table-B disputing the calculation of Service Tax in the Show Cause Notice, 11 Service Tax Appeal No.1784 of 2011 showing summary of the amounts paid on behalf of M/s Sahara to farmers for purchase of land & advances against purchase of land which shows that a balance of ₹3,20,069/- was available with the Noticee as on date hence the Service Tax demanded is not based on correct facts. However the chart provided by the noticee revealing the figure of ₹3,20,069/- is not based on the calculations made for the entire land transacted through Noticee by Sahara India Commercial Corporation Limited because the amount shown to have been received from M/s Sahara in table 'A' of their letter dated 21.02.2011 does not tally with that shown in the RUD No.11 & no reason for the same is given by them. Further amounts paid in cash to farmers as per table 'B' of the letter also does not tally with the bank's accounts submitted by them. Therefore, the contention of the Noticee is not acceptable to me being an afterthought because Shri Ansarul Haque, Partner of Noticee has signed the RUD No. 10 & 11 on 03.09.2009 containing the details of payments made for land, registry done & balance amount left with associate i.e. Noticee in his written statement dated 03.09.2009 recorded under Section 14 of Central Excise Act, 1944 as made applicable to Service Tax cases also. The details of payments made & registries done as per RUD No. 10 & 11 to Show Cause Notice alongwith balance amount left with the Noticee have never been contested / challenged till the date of personal hearing. Therefore, their claim regarding payments made to farmers & balance amount left with them as per chart submitted by them without complete documentary evidence, as discussed supra, is not acceptable to me being an afterthought and balance amount left with the Noticee in RUD No. 10 & 11 are liable to service tax because RUD No. 10 & 11 are reliable evidence for the proceedings before me.
Further I find that in the case of M/s Indus Tubes Ltd. Vs. CCE, Ghaziabad - 2007 (05) LCX - 0034, it was held that 12 Service Tax Appeal No.1784 of 2011 commission received on agreement for procuring order for construction of houses is taxable under 'Real Estate Agent Services'. I find that the ratio of the aforesaid judgment is squarely applicable in the present case.
Further in the case of M/s Prem Steels Pvt. Ltd., Vs. CCE, Meerut - 2006 (10) LCX - 0129 it was held that receiving an amount in respect of introduction of two clients for sale of real estate is liable to Service Tax under Real Estate Agent service head. The ratio of judgment enunciated in the aforesaid case is squarely applicable in the present case.
Further I find that no Service Tax has been collected separately by the Noticee either from M/s Sahara India Commercial Corporation Limited or Ms Sahara India. Therefore, the balance amount in land purchase account as per RUD No. 10 & 11, could be held inclusive of Service Tax payable by them.
Therefore, I am inclined to hold that as per provisions of Section 67(2) of Finance Act, 1994 the gross amount received by the Noticee would be held inclusive of Service Tax payable by them. The details of payments received by Noticee in respect of Lucknow & Hardoi project & Service Tax payable by them are as under:-
Details of payments made by M/s Sahara India Commercial Corporation Ltd. Lucknow to M/s R. K. Builders as per RUD No. 10 for land purchased at Lucknow.
Total Amount Amount adjusted Balance Remarks
paid for land against sale of amount with
land through Associate M/s
registry R. K. Builders
16,53,64,146 17,68,29,605 - 1,14,65,459 No balance left with
associate hence S.
Tax liability_is Nil
Details of payments made by M/s Sahara to M/s R. K. Builders as per RUD No. 11 for land purchased at Hardoi.
13 Service Tax Appeal No.1784 of 2011
Total Amount Amount adjusted against Balance amount left
paid for land sale of land through registry with Associate M/s R.
K. Builders
3,59,89,853 3,48,17,479 11,72,374
Service Tax Calculation Chart
Gross Value of Value of Service Tax@ Edu. Total S.
Services Taxable service 12% Cess 2% Tax
provided of S. Tax
11,72,374 10,44,524 1,25,343 2,507 1,27,850
I find that there was no balance left with Noticee in respect of land purchased at Lucknow project as per RUD No.10 of Show Cause Notice, hence no Service Tax liability arises in respect of purchase of land at Lucknow project. Therefore, I find that Service Tax amounting to ₹1,27,850/- is recoverable from the Noticee in respect of purchase of land at Hardoi under Section 73(1) of Finance Act, 1994 alongwith interest under Section 75 of the Act ibid.
Further Show Cause Notice alleges that noticee have recovered Rs. 4,77,19,750/- against development work done on the purchased land, is taxable under "Site Formation and Clearance, Excavation and Earth moving and Demolition Services " under Section 65 (97)(a) of the Finance Act, 199 4.
I find that as per schedule of job work, the noticee was required to carry out the following work:-
(i) Leveling of soil including filling of gorges / nallah etc. by hiring tractor and trolley including driver wages, fuel etc. and
(ii) Removing shrubs, grass and rubbish from the area complete in all respect I find that the above mentioned activities are very well covered under the definition of "Site Formation Services"
under Section 65 (97) (a) of Finance Act, 1994.
The noticee vide their written defence reply dated 28.01.2011 has stated that the moment land procurement was started, the development work was carried out 14 Service Tax Appeal No.1784 of 2011 simultaneously alongwith land procurement work. Therefore, it is a continuous process alongwith the land procurement work and not that the Development work take place after the whole procurement of land is over, as presumed in the show cause notice. Further they have also enclosed copies of bills issued to M/s Sahara India Commercial Corporation for the said development work. I find that aforesaid contention of the noticee is an afterthought because in the statement of Sri Ansarul Haque, partner of M/s R.K. Builders, recorded on 03.09.2009 before officers of DGCEI, Kanpur under Section 14 of Central Excise Act, 1944, the same has not been reported by him & he has not disclosed the period of providing the said services relating to development activities. Therefore, it has been correctly alleged in the show cause notice that development work had been done only after procurement of land, which is a continuous process & is going on, and as such total amount received by 'noticee for development work has to be treated as taxable during the period upto 22.05.2007. I further find that in the scheme of service tax, taxability of a service has to be decided on the basis of when it was provided and not when the payment for the service provided, was received. Hence, all the 'Site Formation Services' provided by noticee from 16.06.2005 and onwards, are liable to service tax, even if the consideration/ payments for the same were received in advance prior to 16.06.2005 i.e. date of imposition of levy of service tax. Thus the service tax liability on the total amount of Rs.4,77,19,750/ received by noticee, is calculated as under:-
Figures in Rupees
Value of Taxable Taxable Rate of Service Education Total
service (cum Value Service Tax Cess
service tax Tax
value)
4,77,19,750 4,25,15,814 S. tax 51,01,898 1,02,038 52,03,936
12% Edu.
Cess @
2% of S.
tax
15 Service Tax Appeal No.1784 of 2011
Thus, I find that total service tax recoverable' from the noticee is Rs.53,31,786/- (Rs.52,03,936/- for 'Site Formation Services' + Rs.1,27,850/- for 'Real Estate Services'), alongwith interest under proviso to Section 73(1) of the Finance Act, 1994 & the remaining demand amounting to Rs.64,45,223/- which- is due to exclusion of cost of land from the taxable value of 'Real Estate Agent service', is not sustainable against the noticee, as discussed supra.
2. Whether penalty under Section 76, 77 & 78 is imposable upon the Noticee or not?
Show Cause Notice proposes for imposition of penalty under Section 78 of the Finance Act'1994 by invoking the extended period of limitation of five years because Noticee have never filed periodical Service Tax returns in ST-3 as per provisions of Section 70 of the Act ibid for the period 01.10.2004 onwards & thus they have not disclosed wholly & truly the material facts, deliberately with an intent to evade Service Tax, contravening the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994.
The Noticee have contended that they were under bonafide belief that Service Tax is not payable by them. They have cited the case law of M/s Tecumseh Product India Ltd. V. CCE-2004 (167) ELT-498 (SC) wherein it was held that in the circumstances where there was bonafide dispute between the parties in regard to the question whether an activity involved any manufacturing activity or not, extended period for issuing Show Cause Notice cannot be invoked. Further aforesaid provisions of Central Excise are analogous to the provisions of Section 73 of Finance Act, 1994.
I find that in the present case there was no dispute regarding taxability of services & Noticee have never at any stage sought clarification from the Department about 16 Service Tax Appeal No.1784 of 2011 the same, hence the abovementioned cited case law is not applicable in the present case.
Noticee further cited the case law of M/s Jaiprakash Industries Ltd. V CCE-2002 (146) ELT-481 (SC). Wherein Hon'ble Supreme Court held that extended period of five years is not invokable as no evidence of any fraud collusion, willful mis-statement or suppression of fact available with the Department.
The above case law is not applicable in the present case, as I find that in the present case had the officers of Directorate General of Central Excise Intelligence not initiated the inquiry against the Noticee, the said nonpayment of Service Tax would not have been unearthed. Thus, the suppression of facts by Noticee regarding provision of taxable services from the Department are clearly established in the present case.
Further Noticee cited case law of M/s Padmini Products V. CCE - 1989 (43) ELT-195 (SC), wherein it was held that wherever there is scope for believing that goods are not excisable to duty & no license is required to be taken, then extended period under Section 11A is inapplicable. Hon'ble Supreme Court held that mere failure or negligence on the part of manufacturer in not taking out a license & in not paying duty does not attract extended period I find that in the present case Noticee have deliberately suppressed the facts of provision of taxable service by them to M/s Sahara Group, as at no stage they have enquired about the taxability of the services provided by them, and only after investigation by the Department, the said facts came into light. Thus the aforesaid cited case law is of no help to the Noticee. "
Noticee have cited case law of M/s Godrej Foods Ltd. V. CCE-1993 (68) ELT-28 (MP), wherein Hon'ble High Court have held that mere mechanically repetition of the 17 Service Tax Appeal No.1784 of 2011 language of the provision in the Show Cause Notice would not be sufficient to invoke extended period.
In the present case I find that since the Noticee have willfully suppressed all the material facts regarding nature of services provided by them in respect of 'Real Estate Agent Services', gross amount received by them from the Department as at no stage they have even enquired about the taxability of their services in case they have any doubt. Further had the Department not initiated the inquiry against the Noticee, the said facts of providing the services & nonpayment of Service Tax would not have been unearthed. Thus the facts of the present case is quite distinguishable from that in the aforesaid cited case law, hence it is of no help to the Noticee Further, I find that party have contravened the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, as they have not deposited due Service Tax by deliberately suppressing the facts as discussed supra, therefore, I find that this is a fit case for imposition of penalty equal to the amount of service tax evaded under the Section 78 of the Act ibid. Further since a penalty is imposable upon them under Section 78, I am inclined not to impose any penalty under Section 76 ibid.
I further find that Noticee have not applied and taken registration under Service Tax law despite providing taxable services & have thus contravened the provisions of Section 69 of the Finance Act, 1994 read with Rule 4 of Service Tax Rules, 1994 & have rendered themselves liable for penal action under Section 77 of the Finance Act, 1994 I also find that Noticee have not submitted periodical returns in form ST-3 under Rule 7 of Service Tax Rules, 1994 read with Section 70 of the Finance Act, 1994 during the period 01.10.04 to 22.05.07 i.e. the period under consideration in Show Cause Notice, total six ST-3 returns 18 Service Tax Appeal No.1784 of 2011 not filed. Therefore, I am inclined to order for recovery of late fee ₹12,000/- (@ ₹2,000/- for each ST-3 returns not filed) under erstwhile Section 70 of the Finance Act, 1994."
4.3 In the present case the demand of service tax has been made on two accounts as follows:
4.3.1 Under the category of "Real estate Agent Services" for an amount of Rs 1,27,850/-. Appellant have challenged this demand relying on the decision of Delhi Bench in case of Premium Real Estate Developer, supra.
4.3.2 Under the category of "Site Formation Services" for an amount of Rs 52,03,936/-. No specific submission has been found on record in respect of these services. 4.4 In case of Premium Real Estate Developers [2019 (22) G.S.T.L. 373 (Tri. - Del.)] following has been held:
"27. Having considered the rival contentions and on perusal of record, we find that there is no consideration defined and/or provided for the alleged service. In absence of any defined consideration for the alleged service, there is no contract of service at all, and hence the transaction is not liable to service tax. 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 19 Service Tax Appeal No.1784 of 2011 Sahara India. Thus we find that the transaction is one of trading in land. In such transactions the appellant could either incur a loss or have a surplus (profit).
28. From the perusal of Memorandum of Understanding (MoU) between the appellant and M/s Sahara India Ltd. It is very obvious that MoU is not only for providing purely service for acquisition of the land but involves many other function such as verification of the title deeds of the persons from whom the lands are to be acquired and obtaining necessary rights for development of the land from the Competent Authority. The remuneration or payment for providing this activity 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 vs. CC, CE&ST, Goa - 2017 (48) S.T.R. 69 (Tri. - Mumbai) = 2016-TIOL-2843-CESTAT-MUM. 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 20 Service Tax Appeal No.1784 of 2011 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 = 2015- TIOL-2062-CESTAT-MUM 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 cannot be presumed 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 charges will conform to the charging section for taxability and, to the extent that they are not so 21 Service Tax Appeal No.1784 of 2011 attributable, provision of a taxable service cannot be imagined or presumed. Recovery of service tax should hang on that very nail. Each category of fee or charge, therefore, needs to be examined severally to determine whether the payments are indeed recompense for a service before ascertaining whether that identified service is taxable."
29. We feel that since the specific 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.
30. It is also seen that some of the MoUs were not fully executed at the time of the issue of the show cause notice for example, in the case of MoU dated 15/11/2003 entered between Sahara India Ltd. and the appellant, the agreement is for provisioning of 100 acres of land at Village Rora, Distt. Lalitpur, U.P. and for this purpose an amount of Rs. 6,75,00,000/- have been remitted for land cost and an amount of Rs. 1,66,50,000/- have been remitted for the purpose of stamp duty and registration. Thus, a total amount of Rs. 8,41,50,000/- have been remitted to the appellant out of which a total amount of Rs. 3,66,32,000/- have been spent by the appellant for procurement and registration of land. Thus, an amount of Rs. 4,75,18,000/- still remain unspent with the appellant. It is to be seen that out of the above amount though the MoU was for 100 acres of land till the issue of the show cause notice only 77.96 acres of land could only be acquired and thus the remaining amount still was to be used for procurement/acquisition of balance land. This indicates that firstly; the MoU has not been executed fully and therefore the actual remuneration to the appellant have not got finalized and therefore we feel that issuing 22 Service Tax Appeal No.1784 of 2011 the show cause notice in such a stage was premature and unwarranted.
31. As discussed above, since the exact amount of remuneration for providing any service, if any, has not been quantified at the same time since most of the MoU remained to be fully executed and therefore the exact amount of remuneration, which was the difference in amount paid to the seller of land and average price decided in MoU, could not be finalized and therefore we feel that taxable value has not reached finality and therefore demanding service tax on the entire amount paid to the appellant for acquisition of land is not sustainable in law in view of the discussion in the preceding paras." 4.5 The appeal filed by the revenue against this order has been dismissed by the Hon‟ble Delhi High Court [2020-TIOL- 951-HC-DEL-ST] holding as follows:
"15. It stands authoritatively held by this Court, in catena of pronouncements, including Commissioner of Service Tax v. Gecas Services India Pvt. Ltd. 2015 (39) STR 980 (Del), Commissioner of Service Tax, New Delhi v. Menon Associates 2017 (49) STR 284 (Del) = 2014-TIOL-885- CESTAT-DEL, Commissioner of Service Tax v. Amadeus India Pvt. Ltd. 2015 (39) STR 973 (Del) [ 2015-TIOL- 1711-HC-DEL-ST] and Commissioner of Service Tax, Delhi v. Transcorp International Ltd. 2016 (41) STR 822 (Del), relying on Section 83 of the Finance Act read with Sections 35G and 35L(2) of the Central Excise Act, 1944, that, where the lis pertains to chargeability of the activity, conducted by the assessee, to service tax, no appeal would be maintainable before this Court, and that the appeal would lie, instead, to the Supreme Court. This position, it has been noted in the said decisions, also stands clarified by Circular No. 334/15/2014-TRU, dated 10th July, 2014 of the Central Board of Excise and Customs.
16. Mr. Amit Bansal, learned Sr. Standing Counsel acknowledged, with his customary fairness, that the issue 23 Service Tax Appeal No.1784 of 2011 in controversy, indeed, pertains to chargeability of the activity, being carried out by the respondent, to service tax under the head "Real Estate Agent" service.
17. That being so, the present appeal is, clearly, not maintainable before this Court."
4.6 From the above order of Delhi bench, appeal against which have been dismissed by the Hon‟ble High Court on the ground of maintainability, we find that there is no finding rendered in respect of classification of the services under the category of „Real Estate Agency Service". The demand has been set aside on the basis of improper determination of the consideration for provision of the said services. The demand in that case was made on the basis of entire amount received by the appellant for acquiring the land in terms of MOU, in the name of Sahara Industrial Corporation Ltd. In the present case undisputedly the demand has been made only in respect of the amounts received by the appellant over and above the cost of land procured by the appellant for M/s SICCL & M/s Sahara. The specific finding has been recorded in the impugned order to this effect and demand made in the show cause to the extent of the "Amount adjusted against sale of land through registry" has been dropped. We also refer to clause 4, 12 and 13 of the MOU dated 19.06.2003 between appellant and M/s SICCL which read as follows:
"4. That the Second Party shall arrange for the purchase of land under this MOU at the average rate of Rs 14.00 Lacs per Acre within a period of 4 months from the date of signing of this MOU or within any further extended period given by the First Party at its discretion.
12. That all the payments to the Kashtkar/ land owners shall be made through Pay Orders/ Demand Drafts/ Account payee Cheques only by the First Party.
13. That the difference, if any, of the amount being actually paid to the Kashtkar/ owner of land and the average rate shall be payable to the Second Party."
24 Service Tax Appeal No.1784 of 2011 Similarly clause 5, 15 and 16 of the MOU dated 24.11.2003 between appellant and M/s Sahara read as follows:
"5. That the First Party has agreed to purchase the land proposed in the present MOU „at average rate‟ of Rs 6.50 lacs (Inclusive Profit) per acre which shall include all cost of land and development expenses etc. within a period of two months or such further period extended at the discretion of First Party to which the second party has agreed and it has also been agreed that the permission/ approval from Government Bodies/ Competent Authorities or any Regulatory Authority required for the transfer of land shall be responsibility of the Second Party only but it shall excluded stamp duty and mutation expenses which are to be borne by the First Party and/ or its nominee as more explicitly recited hereinafter. In case where the land is proposed to be purchased is at different rates the „average rate‟ shall be calculated by dividing the entire cost of land with he total area for arriving at the „average rate‟ as mentioned hereinabove.
15. That all the payments to the Kashtkar/ land owners shall be made through Pay Orders/ Demand Drafts/ Account payee Cheques only by the First Party.
16. That the difference, if any, of the amount being actually paid to the Kashtkar/ owner of land and the average rate shall be payable to the Second Party."
From the perusal of the above clause we agree with findings recorded in impugned order by limiting the demand by taking the difference of the gross amount received and the amount paid to the land owner, as consideration for the services provided by the appellant.
4.7 In case of Chhattisgarh Steel Castings (P) Ltd. [2020 (34) G.S.T.L. 70 (Chhattisgarh)] Hon‟ble Chhattisgarh High Court has held as follows:
25 Service Tax Appeal No.1784 of 2011 "15. From perusal of facts of the case, it is clear that appellant entered into an agreement to purchase of land from the original owner, but did not execute the sale deed in its favour. The appellant got sale deed executed in favour of third party directly from the original owner of land. The appellant first entered into an agreement with the registered owner of land and paid a nominal amount as advance. It was mentioned in the agreement that he is having rights to sell the land to some other person from the date of execution of sale agreement. It was also mentioned that if the appellant in lieu of agreement executed by him with the original owner enters into an agreement with any other person/third party, then, the said agreement will be binding on the land owner and owner of the property will execute sale deed in his favour directly. On the difference of amount, the first purchaser/appellant only will have his rights.
16. From the aforementioned documents and materials, it cannot be accepted that transaction of sale and purchase of land is a simple sale and purchase of immovable property.
When a person from the first day enters into an agreement to purchase some property with an intention to sell it to some other person, it cannot be said that the transaction was of a transaction of simple sale and purchase of immovable property, in fact, the said act attracts the definition of "Real Estate Agent" and the participation of appellant in view of aforesaid transaction comes within the purview of "Service Provider".
17. The other ground raised by Learned Counsel for the appellant is that as the difference of amount of sale and purchase of immovable properties in the years 2005-06 and 2006-07 have already been shown in his books of account, which was placed for audit before the Department, then, there was no suppression much less willful suppression and, 26 Service Tax Appeal No.1784 of 2011 therefore, invocation of extended period as provided under Section 73 of the Act of 1994 is not justifiable.
18. In the instant case, appellant has only mentioned the amounts of Rs. 2,50,00,000/- and Rs. 1,61,81,450/- under the heading of „other income‟ and during the course of enquiry, it was brought to the notice of the Revenue that the said income is from the sale of immovable properties. On further asking from them, they have produced the agreement and sale deed, by which, it came to the notice of the Department that there was suppression of facts. The liability of payment of income-tax and service tax are two different and separate statutory liability to be discharged by the persons engaged in business. The appellant who is already registered under the service tax for „transportation of Goods by Road‟ as well as „Business Auxiliary Service‟, therefore, it cannot be said that appellant was not aware about the liability of payment of service tax on the income so received from the transactions, which makes him liable for payment of service tax. The appellant did not get himself registered as a "Real Estate Agent" and paid service tax on the amount of income received by him.
19. The act of appellant clearly shows that he suppressed the facts, therefore, the period of limitation is to be counted from the date of knowledge of the Departmental Authority as provided under sub-section (3)(ii) of Section 11A of the Act of 1944. The words "suppression of facts" [have] been dealt with by the Hon‟ble Supreme Court in the matter of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay reported in 1995 Supp (3) SCC 462 = 1995 (78) E.L.T. 401 (S.C.).
20. The Adjudicating Authority has considered the issue of „suppression of fact‟ in detail with respect to date of knowledge in Paragraphs-17.1 and 17.2, which is reproduced herein-below :
27 Service Tax Appeal No.1784 of 2011 17.1 The contention of the Noticee in this regard is not correct in view of the Hon‟ble High Court of Gujarat in the case of Commissioner of C. Ex., Surat-I v. Neminath Fabrics Pvt. Ltd. reported in 2010 (256) E.L.T. 369 (Guj.) wherein it has been held as under :-
Termini from which period of "one year" or "five years" is computed is relevant date as defined in sub-section (3)(ii) of Section 11A of Central Excise Act, 1944-Concept of knowledge of departmental authority entirely absent - Importing of said concept in Section 11A(i) ibid or the proviso ibid would tantamount to rewriting statutory provision and rendering defined term "Relevant date" nugatory-Reasoning, that once knowledge acquired by Department there is no suppression, fallacious as once suppression admitted, merely because Department acquires knowledge of irregularities, suppression not obliterated- impugned Tribunal order introducing novel concept of date of knowledge contrary to provisions of Section 11A ibid, hence quashed and set aside.
Demand-Limitation-Extended period-knowledge of Department, effect- Suppression admitted but Tribunal held demand as barred by limitation importing concept of knowledge of Department, as submitted- Proviso to Section 11A(1) of Central Excise Act, 1944 provides for a situation whereunder provisions of sub-section (i) ibid recast by legislature extending period within which SCN issued- Proviso cannot be read to mean that because there is knowledge, suppression which stands established disappears-Concept of knowledge, by no stretch of imagination, can be read into the provisions-Suppression not obliterated, merely because Department acquired knowledge of irregularities.
Demand-Limitation-Extended period-Period of limitation cannot by reason of any decision of court or even by subordinate legislation be either curtailed or enhanced-
28 Service Tax Appeal No.1784 of 2011 importing of concept of knowledge in sub-section (1) of Section 11A of Central Excise Act, 1944 tantamount to rewiring statutory provision-Not open to superior court/Tribunal either to add or substitute words in Statute.
Interpretation of Stature-Jurisdiction of Court/Tribunal-Not open to superior court or statutory/Tribunal either to add or substitute words in Statute - No canon of interpretation permits exercise of rewriting statutory provision.
Appellate Tribunal‟s order-Demand-Limitation-Extended period-knowledge of Department, effect-Tribunal introduced novel concept of date of knowledge and imported into proviso to Section 11A(1) of Central Excise Act, 1944, a new period of limitation of six months from date of knowledge- Reasoning that once knowledge acquired, there is no suppression, fallacious as merely because Department acquires knowledge, suppression not obliterated- Tribunal order contrary to provisions of Section 11A ibid and not sustainable - Order quashed and set aside.
17.2 Further the Hon‟ble Supreme Court in the case of CCE, Visakhapatnam v. Mehta & Co. reported in 2011 (264) E.L.T. 481 (S.C.) held that "Demand-Limitation-Relevant date for computation of extended period for show cause notice - Cause of action is date of knowledge - Department came to know of manufacture of furniture from information provided by buyer in 1997-Date of knowledge is attributable to 1997- Reply sent by respondent on 27-2-1997 for letter from Department-Limitation if computed from such date, show cause notice issued on 15-5-2000 within prescribed period of limitation of five years-Section 11A of Central Excise Act, 1944."
21. In the light of the law as laid down by Hon‟ble Supreme Court and provisions of the Act, if facts of the case is considered, it is apparent that the appellant is a private limited company engaged in business and already registered for service tax is aware about the requirement of law for its 29 Service Tax Appeal No.1784 of 2011 registration and payment of service tax. The fact of nature of act attracting definition of „Real Estate Agent‟ revealed during course of enquiry only. The appellant has not shown specific source from which the income was received though income was showed in books of account which is a clear act of suppressing correct facts. For the aforementioned reason, the limitation will be counted from the date of knowledge.
22. So far as the ground of imposition of penalty is concerned, as we have held that there was suppression of facts on the part of appellant, which was only gathered during the course of audit and further enquiry from assessee, the Assessing Officer for making the appellant liable for penal action under Sections 77 and 78 of the Act of 1994 has recorded the finding, which is reproduced here- inbelow :-
"20. The Noticee also did not get registered themselves as a real estate agent and did not file any ST-3 returns for the service so rendered as a real estate agent as prescribed under Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994 nor paid service tax in terms of the Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994. The Noticee suppressed the fact that they had during the years 2005-06 and 2006-07 received Rs. 4,11,81,450/- in excess to the sale value of the real estate. This amount was received by them for their engagement in rendering service in relation to sale of real estate. This fact was gathered from the records of the Noticee by the audit and further investigations carried out in the case, the Noticee had also suppressed the fact from the department to avoid payment of Service Tax as a "Real Estate Agent" which is leviable on them as per Section 65(88) of the Finance Act, 1994 read with Section 65(105)(v) of the Finance Act, 1994 during the year 2005- 06 the service tax payable by the Noticee on services rendered as above is Rs. 25,50,000/- and the service tax 30 Service Tax Appeal No.1784 of 2011 payable by the Noticee during the year 2006-07 for services as above is Rs. 19,80,609/- as a Real Estate Agent as detailed in pre-paras. The Noticee evaded the payment of service tax by suppressing of facts and done in contravention of the Rules 6 and 7 of the Service Tax Rules, 1994 and Section 70 and Section 68 of the Finance Act, 1994. They had not taken registration under the Category of a Real Estate Agent as provided under Rule 4 of the Service Tax Rules, 1994 read with Section 69 of the Finance Act, 1994. They also had not filed ST-3 returns under Rule 7 read with Section 70 of the Finance Act, 1994 towards services of real estate agent. Therefore, they are liable for penal action under Sections 77 and 78 of the Finance Act, 1994."
23. The finding recorded by the Assessing Officer for imposition of penalty under Sections 77 and 78 of the Act of 1994 has been affirmed by the Appellate Authority as well as the CESTAT. We are of the considered view that there is no error or infirmity in the said findings recorded by the Assessing Officer and affirmed by the Appellate Authority and the CESTAT.
24. On a specific query made by this Court, the appellant placed on record the minutes of meeting of the Board of Directors to show that they have entered into an agreement to purchase of land at village Chorhata in District Rewa (M.P.) for extension of their business establishment. The minutes of meeting dated 4-4-2004 shows that they have agreed to sell the land within three days of meeting, but they have not assigned any reason for doing so or it is nowhere mentioned that they have got some better land or property for extension of their business.
25. In view of aforementioned facts emerging in the minutes of meeting placed on record, the ground raised by Learned Counsel for the appellant that they have entered into an agreement for purchase of land at village Chorhata 31 Service Tax Appeal No.1784 of 2011 in District Rewa (M.P.) for extension of their business and their act of sale was also bona fide is not sustainable.
26. The case laws of M/s. Viraj Estates Pvt. Ltd. (supra), Shri Banke Bihari Ispat Pvt. Ltd. (supra) and Sarjan Realities Ltd. (supra), relied by the Learned Counsel for appellant to support his contention that the definition of „Real Estate or Consultant‟ is not attracted are on different facts and do not help in any manner to the appellant.
27. So far as case law of Premium Real Estate Developers (supra), relied upon to support the contention that in the facts of the case invocation of extended period of limitation is uncalled for is concerned, in the said case, it was recorded that :-
"31. As discussed above, since the exact amount of remuneration for providing any service, if any, has not been quantified at the same time since most of the MOU remained to be fully executed and therefore the exact amount of remuneration, which was the difference in amount paid to the seller of land and average price decided in MOU, could not be finalized and therefore we feel that taxable value has not reached finality and therefore demanding service tax on the entire amount paid to the appellant for acquisition of land is not sustainable in law in view of the discussion in the preceding paras."
The Tribunal considering that there was no suppression as transaction is duly recorded exact amount of service is not quantified and held extended period was not applicable whereas in the case at hand, the transaction though shown was not specifically recorded in books showing exact source but was shown as „other income‟. The nature of transaction got clarified during the course of enquiry after notice which is a suppression and therefore, the case of Premium Real Estate Developers (supra) is on different fact and not applicable to the case of appellant.
32 Service Tax Appeal No.1784 of 2011
28. The other case law of Bharat Hotels Limited (supra), relied on by the counsel for appellant to support his contention that penalty clause cannot be invoked in the facts of the case is concerned, in that case, the appellant therein was providing so many services and also receiving the services, but out of those, for some they registered with service tax and for some, they could not register as they were not aware that those services are also taxable and immediately coming to the knowledge during the enquiry itself, service tax with interest was deposited and in those facts of the case, it was held that the assessee was not having any intention to evade payment of service tax whereas in the case at hand as held that there was suppression of source of income and therefore, the ruling of Bharat Hotels Limited (supra) is not applicable to the facts of the case."
4.8 In view of the above decision of the Hon‟ble High Court we do not find any merits in challenge made by the appellant to this demand.
4.9 Now coming to the demand made in respect of "site formation services". Appellant do not dispute the classification of service. Appellant has argued that all these amounts were received and the services were rendered during the period prior to levy of service tax in respect of „site formation services‟. Undisputedly service tax in respect of "site formation services was introduced with effect from 16.06.2005 vide Notification No 15/2005-ST dated 07.06.2005. Appellants have furnished copies of the work order and the bills issued by them in respect of the work undertaken under this category. The details are tabulated as follows:
Service Work Order Date Bill Date Amount
Recipie
nt
SICCL SICCL/SS/LKO 27.07.20 19.09.20 7400000
33 Service Tax Appeal No.1784 of 2011
II/WO/01 03 03
SICCL SICCL/SS/LKO 23.07.20 15.09.20 1812000
II/WO/02 03 03
SICCL SICCL/SS/LKO 20.10.20 8897000
II/WO/03 03
SICCL SICCL/SS/LKO 11.01.20 9005722
II/WO/03 03
SICCL SICCL/Sch/LKO 20.09.20 10.12.20 10800000
III/WO/01 03 03
SICCL SICCL/Sch/HARDOI/WO 04.09.20 30.09.20 516920
/01 04 04
SICCL SICCL/Sch/HARDOI/WO 03.08.20 4612530
/02 04
SICCL SICCL/Sch/HARDOI/WO 03.08.20 4945000
/03 04
Total 4,79,89,1
72
As per the RUD 10 & 11 details of payments made by M/s SICCL and M/s Sahara to the appellant in respect of the above work orders, by cheques have been tabulated in the tgable below:
Date Cheque No Amount „Rs
Sahara City Homes Lucknow
24.07.2003 389017 905625
28.07.2003 389023 1800000
13.08.2003 389079 3062787
28.08.2003 343136 1901287
02.09.2003 343001 6331937
03.09.2003 343010 3027360
04.09.2003 343815 1526281
22.09.2003 343881 2500000
34 Service Tax Appeal No.1784 of 2011
26.09.2003 344551 877400
26.09.2003 344550 877400
01.10.2003 858700 5104645
14.10.2003 858947 10000000
Total 37914722
Sahara City Homes Hardoi
05.12.2003 612753 4612530
26.08.2004 000329 516920
04.11.2004 000597 4945000
Total 10074450
Grand Total 4,7989,172
From the show cause notice and impugned order it appears that it has been presumed that these development and site formation works hade been undertaken by the appellant upto 22.05.2007, without specifying any basis. On the contrary it is observed that work orders specifically recorded as follows:
Terms & Conditions
1. Payment: 100% advance for mobilisation to be adjusted on submission of running bills
2. Completion Period: 01 months from the date of receipt of order
3. Unsatisfactory work quality shall be redone at your risk and cost
4. Contribution of P.F.,E.S.I., insurance and any type of royalty or any other liability under prevalent laws shall be borne by you
5. This order may be terminated at any time at the discretion of the company (Sahara India Commercial Corporation Ltd.)
6. You are requested to ensure completion of the work within the stipulated period in all respects conforming to the specifications.
35 Service Tax Appeal No.1784 of 2011
7. If it is found that any tax premium, dues, contribution are to be paid against this work order even after completion of job it shall be your responsibility
8. If any dispute arises under this Job order its shall be referred to sole arbitrator to be appointed by Sahara lndia Pariwar and award given by such arbitrator shall be binding and non-appealable on both parties.
From the above terms and conditions it is evident that services in respect of these work orders would have been completed within one month from the date of receipt of these work orders. Strictly interpreting the above work orders and the payments received against the same, we are constrained to observe that no services under this category would have been provided on or after 16.06.2005, the date from which service tax was levied on the "site formation services". There is nothing on records that these development and site formation services were rendered by the appellant during the period upto 22.05.2007 as have been alleged in the show cause notice.
4.10 On the basis of the work orders and payment details which are part of the relied upon documents with the show cause notice, we do not find any merits in the findings recorded in the impugned order to the effect that these services were rendered after introduction of levy under the category of "site formation services" upto 22.05.2007. In our view these services were provided by the appellant prior to 16.06.2005 and hence cannot be subject to levy of service tax under this category.
4.11 Thus in result we:
do not find any merits in respect of the demand made under the category of "site formation services"; uphold the demand made under the category of "Real Estate Agent Service" by invoking the extended period of limitation.
4.12. As we have restricted the demand to demand made under the category of "real estate agent services" the demand for 36 Service Tax Appeal No.1784 of 2011 interest under section 75 of the Finance Act, 1994 and penalty imposed under Section 78 ibid, is modified accordingly.
4.13 For various contraventions, the penalties imposed under Section 77 (1) (a) is upheld along with the late fee in terms of Section 70 of the Finance Act, 1994.
5.1 Appeal partly allowed to the extent stated in para 4.11, 4.12 and 4.13.
(Pronounced in open court on- 02 August, 2024) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp