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CST, New Delhi Versus M/s Ansal Properties And Infrastructures Ltd.

2017 (9) TMI 1071 - CESTAT NEW DELHI

Management consultancy service - real estate agent service - demand of service tax - Held that: - On careful consideration of the scope of the agreement, we note that there is no consultancy service with reference to improvement of organizational efficiency of the client - It is clear that transfer of know-how by the respondent to the client does not amount to management or business consultant service, as seen from the terms of agreement in the present case - reliance placed on the decision of t .....

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rvice tax liability can be confirmed against the respondent under this category. - Maintenance or repair service - Held that: - Advice or consultancy rendered by the appellant is not covered by maintenance or repair of immovable property. Admittedly the appellants are not involved in any activity of management, maintenance or repair. - Maintenance charges attributable to the money collected from the owners of plot/flat/office for maintenance of the said properties - Held that: - the enti .....

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hem to submit that they were not fully aware of the legal implications of various service tax entries applicable to them - there is no bonafide belief in the present case for non-payment of service tax in time - extended period rightly invoked. - Appeal dismissed - decided partly in favor of assessee. - Service Tax Appeal No.397 of 2011 with C.O. No.199 of 2011 - ST/A/56131/2017-CU[DB] - Dated:- 23-8-2017 - Shri S.K. Mohanty, Member (Judicial) And Shri B. Ravichandran, Member (Technical) Shr .....

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o demand and recover service tax, not paid under various categories. The details of the demands are as below:- DETAILS OF DEMAND Period of Dispute 2002-03 To 2005-06 01/04/2007 To 31/03/2008 01/04/2009 To 30/09/2008 01/10/2008 To 30/09/2009 Show Cause Notice Description of Service SCN C. No. DL/ST/AE/09/05/Pt./99 dated 01/01/2008 SCN C. No. DL-1/ST/R-II/SCN/API/5/08 dated 23/10/2008 SCN C. No. DL-1/ST/R-II/SCN/API/5/08 dated 21/10/2009 SCN C. No. DL-1/ST/R-II/SCN/API/4/10 dated 12/03/2010 Manage .....

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ce and advertising service . A part of demand under the categories of management, maintenance and repair service and business auxiliary service totally amounting to ₹ 1,06,080/- has been confirmed by the Original Authority alongwith equal amount of penalty under Section 78 and further penalties under Section 77 of the Finance Act, 1994. Aggrieved by this order, the Revenue filed this appeal. The respondent also filed a cross objection contesting the grounds of appeal by Revenue as well as .....

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ring out that the respondent has valuable knowledge, expertise and experience in the field of development relating to real estate projects. Relying on the decision of the Tribunal in RPG Enterprises - 2008 (11) S.T.R. 488 (Tri. - Mum.) it is contended that the management consultant services will cover any advice rendered by one organization/person to another organization for improving the organization by conceptualizing, devising, development upgradation of recipient organization. The agreement .....

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e liable to service tax on the consideration received for change of names of the buyers; (c) the Commissioner has erred in holding that supervision charges collected by the respondent from M/s Star Estate Management Ltd. for giving advice for any repair/modification was not covered by the tax entry, maintenance or repair service. There is no requirement of such service to be directly executed by the provider. Advising another person with reference to maintenance or repair is also to be covered a .....

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such finding. 5. Explaining the grounds of cross objection, the learned Counsel submitted that the Commissioner wrongly confirmed the demand on maintenance or repair charges received from owners of the flats/plots for maintenance of common areas. Management of entire building and common areas is a single composite activity and cannot be attributed to each flat or plot owner, separately. The confirmation of demand is also contested on the point of limitation. There is no intention to evade payme .....

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respondent has expertise and experience in the field of real estate projects. They have a set of know-how which will help the client who is engaged in real estate project. The terms of agreement, also relied on by the Revenue in the present appeal, clearly brings out that the respondent are transferring know-how one time and furnished documents relating to real estate development projects, including group housing projects. The know-how is suitable and complete, which will enable the client to pl .....

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ement consultancy. We are unable to agree with such proposal. As rightly pointed out by the Original Authority the know-how was transferred in the shape of data, information, drawings, design specifications of materials and utilities etc. It is thus, an undisputed fact that the know-how, was transferred by the respondent to their clients. In para 3.3.6, the impugned order reproduced the statutory definition as amended from time to time. After extracting the opinion given by IIM, Ahmedabad on the .....

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ions. The assessee was no way involved with the planning, organizing, staffing, directing, controlling and coordinating the activities of his clients. The assessee was also not engaged in redesigning any organizational structure or functioning of any unit or activities of their clients. The assessee only transferred the available know-how to his clients under the agreements. Once the know-how was transferred, it was for the clients to use the know-how in the manner they desired. The assessee had .....

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ervice, as seen from the terms of agreement in the present case. 9. The respondents were sought to be taxed under the category of real estate agent s service in terms of Section 65 (88) (89) of the Finance Act, 1994. The statutory provision of the tax entry are as below :- Section 65 (88) and (89) of the Act, 1994, defines the real estate agent and real estate consultant as under: (88) real estate agent means a person who is engaged in rendering any service in relation to sale, purchase, leasing .....

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s any service provided or to be provided to any person, by a real estate agent in relation to real estate and the term service provider shall be construed accordingly . 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 o .....

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or purchase. We are in agreement with this observation of the Original Authority. In RIICO - 2017 - TIOL - 1725 - CESTAT - DEL., 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 o .....

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the respondent under this category. 11. Regarding tax liability of the appellant under the category of maintenance or repair service we note that they have entered into an agreement with M/s Star Estate Management Ltd. for maintenance of entire building including common area etc. The appellants are required to provide technical advice to M/s Star Estate regarding major repairs and modifications of the said property. We note that the Original Authority after extracting the statutory definition of .....

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aintenance or repair of immovable property. Admittedly the appellants are not involved in any activity of management, maintenance or repair. 12. The Original Authority confirmed service tax liability on the appellant with reference to maintenance charges attributable to the money collected from the owners of plot/flat/office for maintenance of the said properties. The appellant/assessee contested their tax liability in the cross objection. We note that the entire building which was maintained an .....

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