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TMI Blog2019 (6) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... in evidence of the transactions of the purchase and sale. 2. Upon hearing of the parties, we find that the documents are by way of additional evidences, which are part of the record of court below and are necessary for deciding these appeals. Accordingly, the same are admitted. Further, the additional grounds also arise from the impugned orders and these are also admitted. Thus, the misc. applications stand allowed. 3. As the issue in these appeals is common, they are heard and taken-up together for common disposal. 4. The issue involved in these appeal(s) is whether the Appellants are liable to service tax under the category 'Real Estate Agent Services' as defined under Section 65(88) read with Section 65(89) & 65(105) (v). Appellant Name SCN/PERIOD Place/Site Area of Land (in acres) Amount received for procuring land Amount received (Cum-tax value) Service Tax Demand M/s.Elegant Developers SCN dt.22.04.2010 (1.10.2004) to 1.3.2007) Sriganganagar Varodara Kurukshetra 118.60 120.232 Nil 19,00,86,272 11,89,28,069 82,06,63,550 17,24,92,080 10,79,20,208 74,47,03,766 1,75,94,192 1,10,07,861 7,59,59,784 M/s.City Linkes SCN dt.22.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard, would be borne by the appellant firm, (e) bring the owners of the land for the purposes of negotiating, registration, etc, to the relevant places and bear all the expenses involved on these. The MOU further provided that the other expenses like stamp duty/registration charges, mutation charges would be borne by Sahara India. On satisfaction by Sahara India about the fitness of deal(s) for the land, appellant firm shall organise the registration in the name of Sahara India, after making the payment to the owners of land, from the advance amount given to them for the purchase of land. The difference, if any, between the amount actually paid to the owners of land and the average rate per acre settled between the parties as indicated, would be payable to the appellant firm, as their margin or profit. Further Sahara India had reserved its right to withhold 50 per cent of the amount (out of margin) to ensure that the obligations on the developer/appellant are fully discharged in terms of the MOU, and in case there was any serious default on the part of the appellant, the same could be made good by way of forfeiture of such amount, so withheld. 8. Pursuant to the MOU, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards purchase. Where there are several co-owners in a 'Khata' (entry in the land record) the second party/appellant shall ensure that all the co owners execute the document (sale deed) at one time. In no case shall any document be executed by part co owners. That in the case the land is owned by minor, lunatic or an insane person, appellant will get appropriate guardianship certificate from the competent court/authority and agreement to sell shall be executed only with such guardian. In case any dispute is pending before any civil court or revenue Court, regarding title, share or for partition of the property, the appellant will try its best to get the settlement arrived among the co sharers/co owners and agreement to sell shall be executed accordingly. 10.7 That it is the responsibility of the appellant for bringing the cultivators/land owners to the Registrar office along with the necessary documents and photograph and to witness execution/registration of the documents. 10.8 That all payments to the Kashtkar/land owners, shall be made through pay orders/demand drafts/account payee cheques. That the difference, if any, of the amount being actually paid to the cultivators /owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estate Project, at Behrampur, Orissa. As per MOU dated 28.07.2003 between the parties, it was provided and agreed to that cost of land shall be Rs. 7.45 lakhs per acre, inclusive of all taxes, at which SICCL will acquire land from the appellant including the margin of the appellant. Thus, the agreement herein also was similar to the agreement in the aforementioned two cases. In this activity, the appellant M/s City Linkers, actually suffered a loss. The total land procured was only 42.85 acres, against which the appellant incurred cost/payment to land owners amounting to Rs. 5,39,84,650. However, the appellant received only an amount of Rs. 5,05,00,000/-. Thus, the appellant suffered a net loss of Rs. 38,84,650/-. The said agreement was determined and the activity discontinued in the year, 2007. 14. It appeared to Revenue that the appellant was liable to pay the service tax under the classification 'Real Estate Agent Service' (introduced with effect from 1st October,2004) under section 65(88) of the Finance Act which defines a 'real estate agent' as a person who is engaged in rendering any service in relation to sale, purchase, leasing and renting, of real estate and inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that such act of omission was deliberate with intent to evade payment of service tax. Had the officers of Directorate General not initiated inquiry against the appellant, the none payment of service tax by the appellant would not have been unearthed. The SCN further proposed to impose penalty under Section 76,77 and 78 of the Act. Further personal penalty was proposed on Shri Rajat Yadav partner. 18. The SCN was adjudicated on contest, by the Ld. Commissioner, and the proposed demand was confirmed along with interest and equal amount of penalty was imposed under Section 78, along with further penalty under Section 77. The proposed penalty under Section 76 was dropped. Further personal penalty on Shri Rajat Yadav of Rs. 10,000/-, under Section 77(c) of the Finance Act was imposed. Being aggrieved, the appellant(s) are in appeal before this Tribunal. 19. The learned counsel for the appellant urges that the appellant is not a real estate agent. Appellant is not acting as an agent of Sahara India and is in fact transacting on a principal to principal basis. Therefore there can be no question of levying service tax on its business, alleged as service in relation to real estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, are for carrying out the objective of the MOU between the parties. It is further submitted that, sale/purchase of property or investment/booking of land, is the business on principal to principal basis, and not a service as an agent. The learned counsel relied on the ruling of Hon'ble Delhi High Court in the case of Home Solution Retail India Ltd vs. Union of India 2009 (14) STR 433(Tri-Delhi), wherein it has been held as follows: - "On the other hand, the service referred to with section 65(105)(v) which refers to a service provided by real estate agent in relation to real estate, does not, obviously, include the subject matter as a service. This is so because the real estate by itself cannot by any stretch of imagination be regarded as a service. Going back to the structured sentence, that is - service provided to A by B in relation to 'C', it is obvious that 'C' can either be a service such as dry cleaning, hairdressing, et cetera or not a service by itself, such as real estate." 21. Thus in order to tax somebody under section 65 (105)(v), it has to be 1st shown that some service has been rendered by the person to some other person, which is not so in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract is the consideration for the service rendered, which is irrespective of the fact whether the service provider earned profit or loss out of the transaction. In the present case, if the department's case is to be accepted, only in the event of appellant making profit out of the transaction, it would be liable to pay service tax and no service tax will be payable in case of there being a loss. This negates the rendition of any service, apart from showing lack of consideration. Mere sale and purchase of land against profit or loss does not involve any service. Sale and purchase can be outright, or can be upon booking, or in any other manner. Reliance is placed on the ruling of this Tribunal in the case of Commissioner of Service, New Delhi vs. Karam Freight Movers- 2017(4) GSTL 215 (Tri-Delhi), wherein it was held that income earned by assessee, to be considered as a taxable service under any service category, must be shown in lieu of provisions of a particular service. Earning profit on a mere sale and purchase of cargo space in the process, is not a taxable activity under the service tax law. It is also held that such an activity is on principal to principal basis, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplate taxing a transaction like the present one, which is for sale and purchase of immovable property and assuming without admitting, includes some alleged real estate service. In the absence of any statutory mechanism to tax the different element of an indivisible contract, in the aforementioned case, no service tax can be levied in the present case. The contention of the Ld. Commissioner that since the land cost is capable of being known, in the facts of the present case, the profit, if any, amounts to being the consideration for service, is completely erroneous. It have also been held in the said decision that when the Finance Act levies service tax, it only levy service tax on those activities which are for providing services simplicitor and it does not provide for levy of service tax on an indivisible transaction. 25. It is further submitted that if the contention of the Department is to be accepted, it will result into an absurd situation holding the profit element of a purchase/sale transaction of land, as the consideration for alleged real estate service. Further, the loss/deficit, as in case of City Linkers, the same can never be consideration for service. 26. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for their projects. The appellant being service provider agreed to provide the services as per the MOU. Further it is a matter of fact that the appellant was not involved in the sale and purchase of real estate in their own name at any given time. They were providing the services of connecting various land owners with Sahara India, after scrutinising the suitability of land, authentication of documents of title. Further the MOU entitled the appellant to keep the difference amount with them (average price of land as agreed minus the price of land as per the sale deed). Once it is established that the services were provided and due consideration for that has been received by the appellant, the liability for payment of service tax definitely arises. The terms of an MOU between two private parties cannot determine or circumvent the service tax liability, when it is apparent that consideration has been received for the services so provided. The argument of the appellant that the terminology - the difference if any, shows that there may be a condition, when there is no difference,(Supra), cannot determine the tax levy. Further the appellant failed to prove in even a single instance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein 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 Sahara India. Thus, we find that the transaction is one of trading in land, appellant(s) may have surplus / profit or incur loss. 32. From the perusal of Memorandum of Understanding (MoU) between the appellants 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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