Service Tax Leviable on Real Estate Agent for Purchase and Sale of Immovable Property under ‘Real Estate Agent Service: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that service tax is leviable on the real estate agent for purchase and sale of immovable property under ‘Real Estate Agent Service.

The appellant, M/s. Sree Annapoorna Gowrishankar Estates And Constructions Private Limited, is engaged in rendering services under the category of ‘Renting of Immovable Property Services’ has obtained registration for such services. During scrutiny of the account for the year 2006-07 and 2007-08 and it was found that appellant had received Rs.92,56,460/- and Rs.18,01,000/- during 2006-07 and 2007-08 respectively for providing ‘Real Estate Services’.

The appellant had not registered for the said service and did not discharge the service tax liability. Show Cause Notice was issued proposing to demand the service tax along with interest and for imposing penalty. After due process of law, the original authority confirmed the demand along with interest and imposed penalties. On appeal, the Commissioner (Appeals) upheld the same. Hence the appeal.

Counsel M. N. Bharathi appeared and argued for the appellant. It was submitted that the appellant has neither rendered any Real Estate Agent Service nor received any consideration for such services. The appellant purchased and sold such land and the amount received is the profit from such sale of immovable property.

The Counsel further submitted that the appellant had properly accounted the income received in the profit and loss account for relevant year. It is explained that as the asset was acquired and sold within the same financial year, as stock in trade, the same was not reflected in the fixed assets schedule. The amount is actually profit from purchase and sale of immovable property and not service charges for Real Estate Agent services though the appellant had indicated the amount as service charges in their accounts.

A Coram comprising CS Sulekha Beevi, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “It has to be seen that the appellant did not obtain registration under the ‘Real Estate Agent Service’ and did not pay the service tax. The same would have gone unnoticed, but for the scrutiny by the audit party. Therefore, we do not find any grounds to set aside the demand on the ground of limitation.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates