TMI Blog2013 (12) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... whether there was any service rendered by the appellant in the category of real estate agent for receiving development charges. It is common knowledge that the real estate agent transacts the business of sale or purchase of the property, leasing or renting of the property and gets an amount as a commission. Though the definition of real estate consultant talks about evaluation, construction, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate, it has to borne out of the record that such services are rendered. Adjudicating authority has confirmed various other demands on the appellant in a finding that the appellant is not liable to shift the Service Tax liability under the category of Works Contract services, as he has already discharged Service Tax liability under the category of commercial and industrial construction services. It is undisputed that the appellant had discharged the Service Tax liability as understood by him under the category of commercial and industrial construction services and later on shifted to works contract services - construction of residential complex services cannot be liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther service tax paid or otherwise Name of service under which Service Tax paid 1 Akashganga Enclave Commercial Construction carried out by Saumya Engg. (A Div. of Saumya Construction Pvt.Ltd.) Saumya Construction Pvt.Ltd. has undertaken Development activity. Yes. (After 10.09.2004), no Service Tax is paid on Development charges. Construction of commercial service 2 Abhijeet IV Commercial Construction carried out by Saumya Construction Pvt.Ltd. Yes. (From April, 2005) Construction of commercial service 3 Amrashirish Residential Construction carried out by Saumya Engg. (A Div. of Saumya Construction Pvt.Ltd.) Saumya Construction Pvt.Ltd. has undertaken Development activity. Yes. On construction charges (After 16.06.2005), no Service Tax is paid on Development charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being registered for discharge of Service Tax liability under Commercial Industrial Construction w.e.f. 01.06.2007, has re-classified the services under Works Contract services and has discharged less Service Tax. The appellant herein contested the show cause notice on various grounds, which were raised in the show cause notice and also contested the issue on limitation. The appellant contested the show cause notice also on the ground that the development charges received by them, cannot be considered as real estate agent services and post 01.06.2007, the appellants are eligible to avail the benefit of Works Contract which was introduced from that date and can shift from Commercial Industrial Construction services to Works Contract services. 4. The adjudicating authority, after following the due process of law, did not agree with the contentions raised by the appellant and confirmed the demand which was raised, interest thereof and also imposed penalties under various Sections. 5. Ld.Sr.Advocate appearing on behalf of the appellant would take us through the Order-in-Original and submit that the adjudicating authority has totally mis-understood the entire issue and has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is his further submission that various schemes (as has been indicated in Paragraph 2), the main demand is under the head of residential construction towards this scheme of Antarkshitij which is a plotting scheme and not a residential complex. It is his submission that sometimes after starting the project and doing some activity on scheme, appellant abandoned the project and gives the project to another builder and in all such cases, a lumsum amount is charged for construction already done on the date when the project is transferred to another builder; furthermore, the development rights which is transferred to another builder are also transferred by accepting consideration in lumsum is covered by the judgment reported at 2013 (30) STR 66 in the case of Ratha Holding Co. Pvt. Ltd. Vs. CCE Chennai, wherein it was held that when the right to develop is sold, it is not a service but sale of property as such. Therefore, there cannot be any question of Service Tax. It is his submission that the consideration for sale of unfinished structure is distinct than services, on the date and is actually a sale of immovable property. Hence, it is his submission that as regards to both the commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L. He would also rely upon the decision of the Tribunal in the case of Cemex Engineers Vs CST Cochin - 2010 (17) STR 534 (Tri-Bang) for the proposition that no Service Tax liability to be charged prior to 01.06.2007 as the contract which is entered by the appellant is akin to the works contract and discharge of Service Tax by the appellant for the period prior to 01.06.2007 under the Construction services does not itself preclude the appellant from shifting or changing the classification of the activity of the appellant is covered under the Works Contract services. 6. Ld. Departmental Representative, on the other hand, would take us through the entire Order-in-Original. He would submit that the appellant herein had, in fact, provided real estate consultant services in as much as the appellant herein gave consultancy to the Society for development of land and also advised how to create the plots etc. It is his submission that for such services rendered, the appellant received an amount from the said society or non-trading entity in the guise of development charges. It is his submission that the services provided by the appellant would fall under the category of real estate consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Collr. of Central Excise, Calcutta Vs Alnoori Tobacco Products -2004 (170) ELT 135 (SC), has to be read specifically for the ratio that the fact of the decision relied upon has to be shown into factual situation of a given case before relying upon such a decision. It is his submission the short payment of Service Tax under commercial and industrial services has been correctly confirmed by the adjudicating authority as the appellant herein, prior to 01.07.2010, was paying the Service Tax under the commercial and industrial construction services and subsequently shifted to services rendered under works contract services, is incorrect proposition of law as CBEC circular prohibits for change of the classification when already for a particular project, the assessee has started discharging Service Tax liability. 7. We have considered the submissions made at length by both sides and perused the records. 8. The issue to be decided by us in this case is:- i) Whether the appellant is liable to discharge Service Tax liability under the category of real estate agent services for the amount received by them as development charges. ii) Whether the appellant is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is common knowledge that the real estate agent transacts the business of sale or purchase of the property, leasing or renting of the property and gets an amount as a commission. Though the definition of real estate consultant talks about evaluation, construction, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate, it has to borne out 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. Be that as it may, we find that the creation of special purpose vehicle for execution of projects was classified by the CBEC vide CBEC Circular No.151/2/2012-ST, dt.10.02.2012. We reproduce herein below the precise relevant issue ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions raised by ld.Sr.Counsel that the issue involved in this case is squarely covered by the judgment of Hon'ble High Court of Gujarat in the case of Sujal Developers in Tax Appeal No.1550 of 2010, delivered on 22.04.2011 (unreported). Respectfully we reproduce the entire judgment. 1. In this appeal under section 35-G of the Central Excise Act, 1944 (the Act), the appellant, Commissioner of Service Tax, Ahmedabad has challenged the order dated 3.7.2009 made by the Customs, Excise Service Tax Appellate Tribunal (the Tribunal), proposing to formulate the following two questions: [1] Whether the construction activity being performed/ undertaken by M/s Sujal Developers as a service to M/s Saket-III Cooperative Housing Society and its members, is a taxable activity or not? [2] Whether the Hon'ble CESTAT has committed error in interpreting the Board's Circular No.108/2/009-ST dated 29.1.2009 by not distinguishing the case of Sujal Developers from term Developer mentioned in Board's Circular dated 29.01.2009 quoted supra, wherein Sujal Developers have particularly provided construction services to a housing society and no 'sale is involved as such? 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeded. 5. Mr. K. N. Shastri, learned Standing Counsel for the appellant submitted that the service tax with reference to services, viz., Construction of Complex Services is applicable where there is service provider and service receiver. In the present case, the refund claimant, namely, the respondent is the service provider and the society and its members are the service receivers since the respondent, the society and its members are separate legal entities. It was submitted that the clarification issued by the Board on which reliance had been placed by the respondent, is that no tax is leviable where sale is involved, whereas in the instant case, there is no sale involved, but the respondent is providing service to the society and its members. Thus, the respondent being the service provider and the society and its members being the service receivers, the respondent had rightly paid the service tax in respect of the services rendered by it. It was submitted that the land in question belongs to the society and that the respondent had not sold the property to the society and its members, but only rendered construction services on the land of the society as per the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor the respondent provided any services to the members including the prospective members of the society. 8. Inviting attention to the impugned order of the Tribunal and more particularly to the clarification issued by the Board on 29.1.2001, it was pointed out that the Board had clarified that generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of agreement to sell . Such a case, as per the provisions of the Transfer of Property Act, does not itself create an interest in or charge on such property. The property remains under the ownership of the seller and it is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then, the ownership of the property gets transferred to the ultimate owner. Therefore, any services provided by such seller in connection with the construction of residential complex till the execution of such sale deed, would be in the nature of self-service and consequently, would not attract service tax. The learned counsel submitted that in the present case, under the terms of the development agreement, the respondent was entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing direct labour or petty labour contractors whose total bill does not increase 4.0 lacs in one P/Y, it has been clarified that in a case where the builder, promoter or developer builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of such residential complex, the contractor shall be liable to pay service tax on the gross amount charged for the construction services provided, to the builder/promoter/developer under construction of complex service falling under section 65(105)(zzzh) of the Finance Act, 1994. It has been further clarified that if no other person is engaged for construction work and the builder/promoter/developer undertakes construction work on his own without engaging the services of any other person, then in such cases in the absence of service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise. The Board, in the clarification dated 29.1.2001, which has also been reproduced by the Tribunal in the impugned order, has clarified that generally, the initial agreement between the promoters/builders/developers and the ultimate own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax, the transaction in the present case cannot be considered taxable. The Tribunal, accordingly, allowed the appeal and remanded the matter to the original adjudicating authority in view of the fact that the aspect of unjust enrichment would have to be examined before granting refund and also for verification of the correctness of the claim. 13. From the statutory provisions, circulars as well as clarifications issued by the Board referred to hereinabove, it appears that for being chargeable to tax under section 65(105)(zzzh) of the Act is that the person concerned should render service to another person in relation to construction of complex. Thus the basic requirement for falling within the ambit of the said provision is that there has to be a service provider and a service receiver. In the present case as noticed earlier, the land on which the residential complex has been constructed belongs to the society. The society has entered into a development agreement with the respondent. Under the agreement between the society and the respondentdeveloper, the work of construction and development of the housing project has been entrusted to the respondent. The respondent devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was justified in holding that the transaction in this case cannot be considered as taxable. 15. In view of the foregoing discussion, it is not possible to state that the impugned order of the Tribunal gives rise to any question of law, as proposed or otherwise, much less a substantial question of law. The appeal is, accordingly, dismissed. 13. It can be seen that the ratio as laid down by their Lordships in Paragraps 11, 12 and 13 would squarely cover the issue which is before us in this case. 14. We also find that the adjudicating authority has confirmed various other demands on the appellant in a finding that the appellant is not liable to shift the Service Tax liability under the category of Works Contract services, as he has already discharged Service Tax liability under the category of commercial and industrial construction services. It is undisputed that the appellant had discharged the Service Tax liability as understood by him under the category of commercial and industrial construction services and later on shifted to works contract services. We find that the claim of the ld. Counsel before us cannot be brushed away by the lower authorities summarily as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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