Commissioner of Service Tax Vs Elegant Developers (Supreme Court of India)
No Service, No Agency, No Tax: Mere Sale of Land Outside Service Tax Net- SC Upholds CESTAT in Sahara–Elegant Land Deal Case- —Supreme Court Quashes ₹10.45 Cr Demand- Extended Limitation Needs Intent to Evade—SC Rejects Revenue’s Appeal
The Supreme Court dismissed the Revenue’s appeals & upheld the CESTAT’s order, holding that M/s Elegant Developers was not a “Real Estate Agent” or “Real Estate Consultant” during 2004–07, & therefore no Service Tax was leviable on the amounts received under its MOUs with Sahara India Commercial Corporation Ltd (SICCL).
The Court examined the three MOUs (2002, 2004, 2005) under which Elegant Developers was responsible for identifying contiguous land parcels, conducting title verification, arranging documentation, coordinating approvals, & facilitating execution of sale deeds in favour of SICCL. The developer earned only the profit or loss margin between the fixed average price per acre agreed with SICCL & the actual price negotiated with landowners—not a commission or service fee.
The Supreme Court held that:
1. Elegant Developers acted as a trader, not as a service provider.
There was no principal–agent relationship, no consultancy fee, & no consideration for advisory or facilitation services. Income arose purely from trading in land, at times involving the risk of loss. Such transactions are expressly covered under the exclusion in Section 65B(44)(a)(i) as mere transfer of title in immovable property, which is not a “service”.
