Back
IN THE HIGH COURT OF DELHI
D.N. Patel, C. Hari Shankar, JJ.
Principal Commissioner Goods and Service Tax Delhi South - Appellant
Versus
Premium Real Estate Developers - Respondent
SERTA 18 of 2019
Decided On : 18-02-2020
Appeals concerning service tax chargeability must be addressed at the Supreme Court level, not in the High Court, emphasizing the non-maintainability of such matters.
Headnote:(A) Central Excise Act, 1944 - Section 35G - Finance Act - Sections 73(1), 75, 77, 78 - Appeal dismissed on maintainability - The court found that the appeal related to chargeability of service tax on real estate services, which should be addressed at the Supreme Court level as per authoritative rulings. (Paras 11-12, 15)
(B) Service Tax - Definitions - The respondent's activities do not constitute 'Real Estate Agent' services as defined in the regulations, and were deemed to be trading rather than providing taxable services. Therefore, no service tax liability was established. (Para 19)
Facts of the case:
The appeal arose from a service tax demand against a real estate developer regarding a Memorandum of Understanding with a third party for land acquisition, where the Revenue asserted service tax obligations under 'Real Estate Agent' services.
Findings of Court:
The Tribunal ruled that there was no taxable service provided as the respondent was engaged in trading rather than service delivery, hence service tax was not applicable.
Issues: The primary issue was whether the respondent's activities qualified as taxable 'Real Estate Agent' services and the appropriateness of the appeal's filing in the High Court.
Ratio Decidendi: The court reasoned that the Tribunal's findings were correct, indicating that the service tax was improperly levied and no maintainability existed for the appeal at the High Court as established by precedent.
Result: Appeal dismissed as not maintainable.
| Table of Content |
|---|
| 1. appeal process overview (Para 1 , 2) |
| 2. details of the memorandum of understanding and advances (Para 3 , 4 , 5 , 6 , 7 , 8) |
| 3. tribunal's findings about real estate agent service (Para 9) |
| 4. appellant's argument regarding service tax (Para 10 , 11) |
| 5. controversy over service tax chargeability (Para 12) |
| 6. legal framework for appeals on service tax (Para 13 , 14 , 15) |
| 7. appeal not maintainable in high court (Para 17) |
| 8. conclusion dismissing the appeal (Para 18 , 19) |
JUDGMENT
D.N. Patel, Chief Justice (Oral)--This Appeal, preferred by the Principal Chief Commissioner, Goods and Service Tax under Section 35G of the CENTRAL EXCISE ACT , 1944, assails Final Order, dated 27th November, 2018, passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "the learned Tribunal"), in Appeal No. ST/50103/2014.
2. Inasmuch as, in our view, the appeal is not maintainable before this Court, we may merely advert, briefly, to the facts.
3. The respondent is engaged in the business of real estate. A Memorandum of Understanding was entered into, between the respondent and M/s. Sahara India Commercial Corporation Ltd. (hereinafter referred to as "Sahara"), for acquiring three parcels of land. As per the said MOU, Sahara was to acquire the land, including the cost and development expenses, and the respondent was required to
i) demarcate the land into blocks,
ii) purchase the land in contiguity block-wise,
iii) furnish title papers etc. to enable purchase of the land,
iv) obtain permission and approval of the competent authority for transfer of the land, and to bear expenses thereof, and
v) bring the owners of the land for negotiation, registration, etc, to the relevant places and bear all the attending expenses.
The MOU also stated that stamp duty and mutation charges would be borne by Sahara.
4. Advances were received, by the respondent, from Sahara, for each site, a substantial part whereof was paid to the seller/perspective seller of the land.
5. The Revenue was of the opinion that the above arrangement rendered the respondent liable to pay service tax under the head "Real Estate Agent" service. A "Real Estate agent", we may note, is defined in Section 65 (88), as "a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate, includes a real estate consultant". "Real Estate Consultant" is defined in Section 65 (89) as "a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, constructions, implementation, supervision, maintenance, marketing, acquisition or management, of real estate".
6. On the ground that the respondent had not paid service tax, payable by it under the head "Real Estate Agent" service, a Show Cause Notice was issued to the respondent on 22nd April, 2010 by the Additional Director General, DZU, DGCEI, New Delhi, proposing a demand of service tax of Rs.1,55,10,433/-, for the period 1st October, 2004 to 9th December, 2005, along with interest and penalty.
7. The said Show Cause Notice was adjudicated, by the Commissioner, Service Tax, vide Order-in-Original dated 30th September, 2013, whereby the aforesaid proposed demand of service tax of Rs.1,55,10,433/- was confirmed under Section 73 (1) of the FINANCE ACT , 1994 (hereinafter referred to as " FINANCE ACT "), along with interest under Section 75 and penalty under Sections 77 and 78 of the FINANCE ACT .
8. The respondent appealed, against the said Order-in-Original dated 30th September, 2013, to the learned Tribunal.
9. Vide the impugned Final Order dated 27th November, 2018, the learned Tribunal held that
i) the agreement between the respondent and Sahara required the respondent to procure land from the land owners and transfer a part thereof to Sahara, after verifying the title of the land owners,
ii) Sahara paid the price of the land to th
