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2017 (1) TMI 609 - AT - Service TaxDevelopment of immovable property - administrative charges - restoration charges - transfer charges - Revenue has taken the view that these charges have been recovered in connection with the sale of real estate and hence, are liable to service tax under the category of Real Estate Agent Services defined under Section 65 (88) of the Finance Act, 1994, which has been introduced w.e.f. 16/10/1998 - demand of tax, with interest and penalties. Held that: - The administration charge has been recovered by the appellant from all original allottees of flats to cover expenses in connection with registration etc. It is fairly obvious that such charges are not covered within the definition of Real Estate Agent, in as much as it has been collected by the appellant directly from the allottees. In such a transaction there are only two parties - the buyer and seller (appellant) of the flat. Since no service has been rendered, the demand for service tax is not sustainable. Restoration charges - Held that: - such amounts have been recovered when an allottee defaults in his payment schedule and for that reason allotment is cancelled. In such cases, if the allottee approaches for restoring the allotment, restoration charges are levied - such charges are in the nature of a penalty imposed on the allottee to cover damages caused by his default in payment - such charges cannot be considered as a service charge liable for levy of service tax. Transfer charges - Held that: - A person who is engaged in rendering any service in relation to sale of real estate is liable to pay service tax under the Real Estate Agent Services - the transfer charges would be liable for payment of service tax under the above category. Matter remanded to the Adjudicating Authority to re-compute the demand within the normal period of limitation - penalties set aside - appeal allowed by way of remand.
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