Omaxe Limited Vs Commissioner of Central Goods And Service Tax and Central Excise (CESTAT Delhi)
Service Tax Demand Quashed as Development Rights Treated as Benefits Arising From Land; CESTAT Delhi Sets Aside Service Tax on Development Rights Due to Transfer of Land Interest; No Service Tax on Transfer of Development Rights Because Rights in Land Are Conveyed: CESTAT; Development Rights Transaction Outside Scope of ‘Service’ Under Finance Act: CESTAT Delhi; Service Tax Cannot Be Levied on Development Rights Transfer Linked to Immovable Property; CESTAT Allows Appeal After Holding Development Rights Are Not Taxable Services; Transfer of Undivided Interest in Land Removes Development Rights From Service Tax Net
The appeal was filed against Order-in-Original dated 06.11.2018, by which a service tax demand of ₹4,48,59,134/- along with interest and penalty was confirmed against the appellant.
The appellant is a real estate developer engaged in developing integrated townships. For acquiring land development rights, the appellant entered into Memorandums of Understanding with land-owning companies, including M/s Lavanya Builders Pvt. Ltd. and M/s Source Developers Pvt. Ltd. Under these arrangements, the land-owning companies transferred development rights to the appellant.
The Directorate General of GST Intelligence (DGGI) gathered information regarding these arrangements and alleged that the appellant had not paid service tax on such transactions. A show cause notice dated 10.04.2017 was issued alleging that transfer of development rights for consideration amounted to a taxable service under Section 66B of the Finance Act, 1994, because it did not involve transfer of title in immovable property. The extended period under Section 73(1) of the Finance Act was also invoked. The adjudicating authority confirmed the demand and imposed penalty, leading to the present appeal before the Tribunal.
