TMI Blog2023 (10) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... o sale of land to JC and is hence covered under the real estate agent service. The whole activity as it unfolds above shows that the appellant deliberately tried to suppress information and build up an alternate story just to evade payment of service tax. They are hence liable to pay duty and interest as per the extended time limit evoked by the impugned order. The imposition of penalty will be examined separately. Consulting Engineer Service - managing the construction of a project belonging to M/s Golden Constructions - HELD THAT:- The appellants activities as stated by them are in the nature of support services of business or commerce and are taxable accordingly. No consultancy or advice was rendered. Even during the recording of statement from the appellant on 26/08/2009 the department Superintendent had as per question 19 referred to the supervision of construction activity and management of the project being classifiable under Business Support Service w.e.f. 01/05/2006. The impugned order is based on assumptions and presumptions, only because the appellant charged management fee of Rs 85/- per square feet. The mode of payment cannot be determinative of the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. On intelligence that the appellant is not paying appropriate service tax, the Survey, Intelligence and Research Unit of the Commissionerate took up investigation. On verification and scrutiny of documents of the appellant, it was noticed that they were engaged in promoting layouts / projects which they market as plot / land to individual customers for residential construction. It was also noticed that the appellant has realized an amount of Rs.14 crores being the assignment fee / nomination fee for causing the sale of land and had not discharged service tax on such receipts. Further verification of the ledger of the appellant, it was noticed that the appellant had allegedly managed the construction of a project belonging to M/s Golden Constructions and charged management fee of Rs 85/- per square feet. It was felt that construction management normally starts with some level of conception, design and implementation of the project. Such works are carried out only by qualified persons. Hence it was felt that they have provided Consulting Engineer Service to M/s. Golden Constructions. The service was taxable from 07/07/1997 and the appellant accounted receipt of consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded Consulting Engineering Service to Golden Constructions a Proprietary concern, he stated that they have provided comprehensive support for the project from the year 2005 itself. The service if at all is classifiable as support service for business and commerce as per section 65(104c) of the Finance Act 1994 which came into force from 01/05/2006. They have however paid the tax only after receipt of OIO. As regards the demand on GTA service, he stated that they have paid service tax on the same before issue of SCN. Since there was no mens rea involved and they had paid duties with respect to project management and goods transport, hence invoking the larger period in their case was bad in law. He cited case laws in their favour and prayed that the impugned order be set aside. 4.2 The learned AR has drawn attention to the following judgments of CESTAT cited in the impugned order to support Revenue s stand: i) Gauri Ganesha Real Estates [2012 (28) STR] and ii) Prem Steels (P) Ltd [2009(14) STR 748] He further reiterated the points given in the impugned order on behalf of Revenue. He prayed that the order may be upheld. 5 We find that the main dispute relates to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another buyer i.e. JC for the said land. A tripartite agreement dated 16/11/2007 was signed between JRBS, JC and the appellant for sale of the said land by JRBS to JC with the appellant receiving an assignment fee / nomination fee for causing the sale of land to JC. Appellant states that it was JRBS who found the new buyer JC and they had no role to play in it. The money received by them was to compensate them for the cost incurred and profit lost by them due to the deal. d) The said 1.90 acres was sold by JRBS to JC for a sum of Rs 16,15,00,000/- as per Deed of Absolute Sale dated 26/11/2007. This is Rs 35,00,000/- short of the money he would have received had the original sale to the appellant gone through. The facts above show that there are discrepancies in the appellants narration, it may hence be profitable to look at the relevant parts of the various Agreements signed to understand the issue better. 8. The different Agreements forming a part of this issue are discussed below. 8.1 AGREEMENT TO SELL BETWEEN THE APPELLANT AND JRBS Relevant paras of the Agreement to Sell are reproduced below: NOW THIS AGREEMENT WITNESSES AS FOLLOWS Undertaking to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions contained in Para 1 above regarding release of title deeds and discharge of amounts due to ICICI Bank Ltd. whichever is later, said sum of Rs.14,00,00,000/- being the assignment / nomination fee to GHPL for causing the sale of the land described in Item No. 3 of the Schedule hereunder by RBG in favour of JC/Second Party. (emphasis added) The notable points are that as per the sale price agreed upon JRBS who was to get Rs 16,50,00,000/- if the appellant had purchased the land now gets only Rs 16,15,00,000/- (i.e. a loss of Rs 35,00,000/-). The Agreement also acknowledges the dominant role of the appellant in facilitating the sale of the 1.90 acres of land due to the following reasons:- i) It was the appellant who instructed M/s Jesus Call to pay JRBS an amount of Rs 16,15,00,000 by 26/11/2007. The very date by which they (appellant) were required to pay JRBS to buy the land. ii) JRBS now agreed to receive only Rs.16,15,00,000/- from JC for the sale of land as per the directions of the appellant who caused the sale. iii) the appellant received Rs 14,00,00,000/- as assignment / nomination fee for causing the sale of land . iv) the appellant did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by a person whose acts or omissions have caused loss or injury to another, in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury. Railroad Co. v. Denman, 10 Minn. 280 (Gil. 208) ; Hughson Condensed Milk Co. v. State Board of Equalization, 23 Cal.App.2d 281, 73 P.2d 290, 292. For Extra Compensation and Fair and Reasonable Compensation , see these titles. . . . (Page 354) ASSIGNMENT. A transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein. . . (Page 153) NOMINATE. To name, designate by name, or appoint. Wilson v. Stump, 310 Mass. 614, 39 N.E.2d 416, 418; to name, designate, or propose for election or appointment. State ex rel. Pittman v. Barker, 113 Fla. 865, 152 So. 682, 683, 94 A.L.R. 1481, for an office, a privilege, a living, etc. . . . (Page 1199) FEE. A charge fixed by law for services of public officers or for use of a privilege under control of government. Fort Smith Gas Co. v. Wiseman, 189 Ark. 675, 74 S.W.2d 789, 790. A recompense for an official or professional service or a charge or emolument or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 656], has cautioned against the growth of real estate mafia and criminalization of real estate transactions by use of legal instruments. c) Role of JRBS: Further the appellant states that it was JRBS who found another buyer (JC) and the buyer came forward to compensate them (appellant) for the cost incurred and profit lost. This is a bald statement without any proof. As per the general rule in legal proceedings, he who asserts must prove. The appellant who has asserted this view should prove the point but has failed to do so. The appellants explanation have some discrepancies. They are: i. Para 5 of the agreement to sell between JRBS and the appellant dated 26/07/2007 restrained JRBS from encumbering, creating a charge over or otherwise dealing with the said property in a manner contrary to the terms of the agreement. This being so JRBS could not immediately after signing the agreement have started to look out and find another buyer for the land, an act which was specifically prohibited by the agreement dated 26/07/2007. Instead, it was the appellant as the to-be owner of the land who could have looked for prospective buyers. ii. Even if JRBS had looked for prospective b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om landowners and re-sale of the same to Real Estate Developers doesn t fall under the category of Real Estate Agency Service and hence not liable to service tax and DLF Commercial Projects Corporations Vs Commissioner of Service Tax, Gurugram [Final order No. 60554/2019] dated 22/05/2019 to support their stand that in the absence of any consideration there is no service at all. The facts of the case as discussed above are different. The appellant in this case has provided service in relation to sale of the land and hence the case laws are distinguished. Revenue has relied upon two Tribunal judgments namely Gauri Ganesha Real Estates [2012 (28) STR] and Prem Steels (P) Ltd [2009(14) STR 748] to state that money retained by the appellants over and above the sale price is in the nature of a commission. Each case is dependent on its own facts and no two set of facts are identical. We find that the facts in the judgments cited by Revenue are not identical to the issues here. However, we have independently also come to the conclusion that the appellant in this case has rendered the service of a real estate agent , by facilitating the sale of land. 8.5 Conclusion: In the light of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Credibility Study and follow up, Price Negotiation etc. Hence the supervision of construction activity and management of the project are classifiable under Business Support Service with effect from 01.05.2006. As per Section 65(104c) of the FA 1994 support services of business or commerce means- services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation - For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security As per Section 65(105)(zzzq) of the Finance Act 1994, Business Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises automatically by operation of law. As per the Hon ble Supreme Court's judgment in Commissioner of Central Excise, Pune Vs M/s SKF India [2009-TIOL-82-SC-CX] interest is to be paid on delayed or deferred payment of duty for whatever reasons. 12.1 The appellant states that there was no mens rea on their part in evading duty. They cannot be alleged to have suppressed the facts with intention to evade tax. Hence the extended period for issue of SCN cannot be invoked and no penalty can be imposed. The main plea taken by the appellant against invoking the extended time limit for issue of SCN is that on 26/08/2009 itself a detailed statement was taken from JRBS by Service Tax officials. They too gave all the material information relating to their transactions with very detailed workings and supporting documents to the department on 26.08.2009 itself, hence issue of SCN on 19.4.2012 is an afterthought. It is their contention that the perceived delay in issue of SCN absolves them of a charge of suppression further they cannot be alleged to have suppressed the facts with intention to evade tax. They honestly believed that they were not liable to pay service tax on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle being, he who asserts must prove. We are not aware of the complexities of the investigation / verifications etc. to be undertaken so as to fix a reasonable time taken for the issue of SCN. Nor does the statute contemplate giving appellate authorities any such powers. The powers of Constitutional Courts in such cases cannot be replicated by us as the powers of the Tribunals are not concomitant with that of Constitutional Courts. Whether, in a particular set of facts and circumstances, there was any fraud or willful misstatement or suppression of facts etc. with intention to evade payment of duty is a question of fact depending upon the facts and circumstances of a particular case. As discussed above suppression with intention to evade payment of duty has been established in this case, hence the appellant is liable to pay the statutory penalty as per section 78 of FA 1994. Having agreed with the appellant as regards duty payment on the other two services are concerned and having found a penalty under section 78 ibid to be proper, we feel that the penalty under section 77 need not be separately imposed. 12.2 We shall now examine the judgements cited by the appellant on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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