Case Law Details
Sree Annapoorna Gowrishankar Estates And Constructions Private Limited Vs Commissioner of Central Excise and Service Tax (CESTAT Chennai)
Service Tax Leviable on Real Estate Agent if it acted as a middleman/ agent in the purchase and sale of immovable property and the amount received is consideration for such services.
Introduction: In a notable legal case before the CESTAT Chennai, Sree Annapoorna Gowrishankar Estates And Constructions Private Limited were challenged by the Commissioner of Central Excise and Service Tax. The issue at hand revolves around the service tax levied on the appellant for purchase and sale of immovable property under the category of ‘Real Estate Agent Service.’
Analysis: The case delves into multiple legal complexities, with the appellant contending that they have not rendered any Real Estate Agent Service. They argue that they purchased and sold land, and the amount received is a profit from such sales. On the other hand, the department argues that the appellant functioned as an intermediary, i.e., a Real Estate Agent, and thus, the amount received should be considered as commission.
The documents relied to support this argument are the General Power of Attorney and declaration executed by the land owners to the appellant. On bare perusal, it can be seen that these documents do not confer any legal title or possession over the property to the appellant. These documents only facilitate the appellant to find a buyer for the land without the involvement of the land owners. The documents are executed for a trust and assurance that the land owners will not sell their land to any other buyer. The appellant contends that the land owners were paid the entire consideration of the property at the time of executing General Power of Attorney and that possession was handed over to the appellant. The General Power of Attorney is only an authorization to sell and to find a buyer. This facilitates the appellant for finding a buyer for the land and also avoid the need of each land owner to come to the Register Office. It saves stamp duty also. The sale deed has been ultimately executed by the land owners and not by the appellant. From the facts it is clear that the appellant has acted as a middleman/ agent in the purchase and sale of immovable property and the amount received is consideration for such services.
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