Commissioner Of Service Tax vs M/S Elegant Developers

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

COMMISSIONER OF SERVICE TAX ….APPELLANT(S)

VERSUS

M/S ELEGANT DEVELOPERS ….RESPONDENT(S)

JUDGMENT

Mehta, J.

For ease of reference, this judgment is divided into

the following sections:

INDEX

A. BRIEF FACTS ............................................................ 5 Signature Not Verified Digitally signed by NEETU KHAJURIA B. IMPUGNED JUDGMENT ............................................ 16 Date: 2025.11.10 16:57:21 IST Reason:

1 C. SUBMISSIONS ON BEHALF OF THE APPELLANT ...... 19

D. SUBMISSIONS ON BEHALF OF THE RESPONDENT ... 21

E. ANALYSIS ................................................................ 24

I. Whether the respondent rendered services falling within the category of ‘Real Estate Agent’, taxable under Section 65(105)(v) read with Section 65(88) of the Finance Act, 1994, during the period from 1st October, 2004 to 31st March, 2007? ........................ 25 II. Whether the appellant has established that the respondent deliberately suppressed facts, thereby justifying the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994? ................................................. 37

F. CONCLUSION ........................................................... 42

1. Heard.

2. The Commissioner of Service Tax, New Delhi1

has filed these statutory appeals under Section

35L(b) of the Central Excise Act, 1944, assailing the

common judgment and final order Nos.53602-53605

of 2018 dated 21st June, 2019, passed by the

1 Hereinafter, being referred to as “appellant or Commissioner”.

2

CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 Customs, Excise and Service Tax Appellate Tribunal,

Principal Bench, New Delhi2 in Service Tax Appeal

Nos. 50119-50120 of 2014.

3. The M/s Elegant Developers, 1-C, Beli Road,

Allahabad, Uttar Pradesh3 was issued a Show Cause

Notice dated 22nd April, 2010 by the Commissioner

and pursuant to the adjudication thereof, the

Commissioner vide order dated 30th September,

2013, imposed a penalty and demand of tax against

the respondent in the following terms:

“49. In view of the aforesaid discussion and findings, I pass the order as under:-

ORDER

1. I confirm the demand of Rs.10,45,61,837/-

(Rupees Ten Crores Fourth Five Lakhs Sixty One Thousand Eight Hundred Thirty Seven Only) against M/s Elegant Developers 1-C, Beli Road, Allahabad, (UP) under Section 73(1) of the Finance Act, 1994.

2. I order to recover interest on Rs.10,45,61,837/- from M/s Elegant Developers 1-C, Beli Road,

2 Hereinafter, being referred to as “Appellate Tribunal”. 3 Hereinafter, being referred to as “respondent”.

3 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 Allahabad, (UP) at appropriate rates under Section 75 of the Finance Act, 1994.

3. I impose a penalty of Rs.10,000/- (Rupees Ten Thousand Only) on M/s Elegant Developers 1-C, Beli Road, Allahabad, (UP) under Section 77 of the Finance Act, 1994 for not applied and taken registration under Section 69 of the Finance Act, 1994 and for not filing prescribed ST-3 returns under Section 70 of the Finance Act, 1994 read with Rule 4 and 7j of the Service Tax Rules, 1994 in respect of ‘Real Estate Agent Services’.

4. I impose a penalty of Rs.10,45,61,837/- (Rupees Ten Crores Fourth Five Lakhs Sixty One Thousand Eight Hundred Thirty Seven Only) against M/s Elegant Developers 1-C, Beli Road, Allahabad, (UP) under Section 78 of the Finance Act, 1994.

5. I impose a personal penalty of Rs.10,000/- (Rupees Ten Thousand Only) on Shri Rajat Yadav, Partner of M/s Elegant Developers 1-C, Beli Road, Allahabad, (UP) for failure to furnish required information/documents and non appearance against summons on time under Section 77(c) of the Finance Act, 1994 as amended.

6. I do not impose any penalty under Section 76 of the Finance Act, 1994 upon M/s Elegant Developers, 1-C, Beli Road, Allahabad (UP).”

4. Being aggrieved, the respondent preferred an

appeal under Section 86 of the Finance Act, 1994 to

the Appellate Tribunal which stands allowed vide

final judgment and order dated 21st June, 2019, and

4 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 is the subject matter of challenge in these statutory

appeals under Section 35L(b) of the Central Excise

Act, 1944, as made applicable to Service Tax matters

by Section 83 of the Finance Act, 1994.

A. BRIEF FACTS

5. Succinctly stated, the facts relevant and

essential for disposal of these appeals are noted

hereinbelow.

6. The respondent, a partnership firm which was

engaged in business of purchasing, selling,

developing, and dealing in lands, buildings, and other

allied activities, entered into three separate but

substantially identical Memorandums of

Understanding4 dated 25th December, 2002, 30th

December, 2004, and 17th August, 2005, respectively

with M/s Sahara India Commercial Corporation Ltd.5

4 For short “MOUs”.

5 Hereinafter, being referred to as “SICCL”.

5 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 for the acquisition, development and management of

land parcels for its real estate project at Sahara City

Homes, Sri Ganganagar (Rajasthan), Vadodara

(Gujarat), and Kurukshetra (Haryana) respectively.

7. The salient features of the MOUs germane for

the adjudication of the present appeals, are as under:

i. SICCL agreed to pay the respondent a

‘fixed average rate’ per acre of land, which

was to be identified, divided, and

demarcated by the respondent, along with

complete documentation and other related

formalities and the fixed average rate was

to be determined as follows: -

Place/Sites Date of Area of Fixed MOU the Average land rate per (in acre (in Rs.) acre) Vadodra 25th 146.84 12,40,000/- December, 2002

6

CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 Sriganganagar 30th 112.46 15,65,000/-

December, 2004 Kurukshetra 17th 150 38,45,000/- August 2005

ii. SICCL had agreed to purchase land at

afore-mentioned locations, at the fixed

average rate per acre, which included the

entire cost of the land as well as the

development expenses.

iii. As per the MOU, the respondent was

responsible to carry out the following

specific tasks: -

a. Purchase the land in contiguous

blocks,

b. Divide and demarcate the entire land

into blocks of 20 to 30 acres,

c. Furnish title papers and other

necessary documents for the land,

7 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 d. Obtain permissions and approvals

from the concerned authorities for

land transfer, with all related

expenses to be borne by the

respondent, and

e. Bring forward the landowners for

negotiations, registration, and other

formalities, while SICCL was to bear

all related expenses, including stamp

duty, registration charges, and

mutation fees.

iv. Upon being satisfied as to the propriety

and fitness of the proposed land

transactions, the respondent was

obligated to effectuate the registration of

the said land in the name of SICCL, after

disbursing the requisite payments to the

respective landowners from the advance

8 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 funds provided by SICCL for the purpose

of acquisition.

v. Any shortfall or surplus between the

amount paid to the landowners and the

fixed average rate would accrue to the

respondent as its profit-loss margin.

vi. SICCL reserved the right to withhold 50%

of the respondent’s margin to ensure due

performance of the MOUs obligations, with

such withheld amount liable to forfeiture

in case of any serious default by the

respondent.

vii. In the event the respondent defaulted in

performing its obligations under the

MOUs, SICCL was entitled to terminate the

agreement, and the withheld amount

would be liable to forfeiture.

9 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

8. The Directorate General of Central Excise

Intelligence, Delhi Zonal Unit6, on the basis of specific

intelligence that the respondent had been engaged in

providing services to SICCL in relation to the

acquisition and development of its real estate projects

and had received substantial consideration without

discharging the liability of service tax, initiated

investigation against the respondent. In the course

thereof, the Directorate General called upon the

authorized representative of SICCL to furnish

information of the Real Estate Agent/s engaged,

including the copies of bills raised by such agents

and the amount paid in consideration of such

services. The respondent was also directed to furnish

copies of its Service Tax registration, returns filed

thereunder, income tax returns along with audited

balance sheets for the financial years 2003-04 to

6 Hereinafter, being referred to as “Directorate General”.

10 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 2007-08, as well as copies of agreements entered into

with various companies for providing services in

relation to real estate.

9. Upon perusal of the statements of the

authorized representative of SICCL as well as the

respondent, the Directorate General, prima facie,

concluded that the respondent squarely fell within

the purview of a ‘Real Estate Agent’ as defined under

Sections 65(88) and 65(89) of the Finance Act, 1994,

and had wilfully suppressed the fact of rendering

taxable services to its client from 1st October, 2004,

onwards from the jurisdictional Service Tax

authorities.

10. Accordingly, the Directorate General issued a

Show Cause Notice dated 22nd April, 2010, to the

respondent requiring it to show cause why Service

Tax totalling Rs. 10,28,81,379/- (Rupees Ten Crore

Twenty-Eight Lakh Eighty-One Thousand Three

11 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 Hundred Seventy-Nine Only) for the period from 1st

October, 2004, to 31st March, 2007, may not be

charged and recovered from the respondent under

the proviso to Section 73(1) of the Finance Act, 1994.

The notice further called upon the respondent to

explain why penalty should not be imposed upon it

under the relevant provisions of the Finance Act,

1994. The notice also proposed to invoke the

extended period of limitation under Section 73 of the

Finance Act, 1994, on the ground that the non-

payment of service tax in the present case was

occasioned by wilful suppression of material facts

with intent to evade payment of tax.

11. The respondent submitted a reply to the said

notice vide letter dated 1st March, 2011, contending

that the activities undertaken by it did not fall within

the ambit of taxable services as it was not covered

under the category of ‘Real Estate Agent’, asserting

12 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 that the nature of its dealings was confined to

purchase and sale of land, and did not tantamount

to any service in relation to real estate. The

respondent further contended that it had undertaken

development activities in respect of the land prior to

the execution of the sale deeds, and thus, its actions

did not fall within the scope of taxable services under

Chapter V of the Finance Act, 1994. The respondent

also submitted that it had received advance money

from SICCL against sale of lands from time to time.

12. The respondent also objected to the invocation

of the extended period of limitation by the Directorate

General, asserting that it was under a bona fide

impression that no service tax was payable on the

transactions in question, and therefore, there was no

wilful suppression or mis-statement of any material

facts on its part so as to warrant such invocation.

13 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

13. The said Show Cause Notice came to be

adjudicated by the Commissioner, after

consideration of the reply of the respondent, vide

Order No. 132/GB of 2013 dated 30th September,

2013, raising the demand of service tax and awarded

penalties as mentioned above7.

14. The Commissioner held that the expression

‘Real Estate Agent’ as defined under the Finance Act,

1994, was of wide amplitude, covering any person

engaged in providing services in relation to the sale,

purchase, leasing, or renting of real estate, and

included a ‘Real Estate Consultant’. It was further

held that the scope of the definition extends to any

person rendering advice, consultancy, or technical

assistance in relation to real estate activities, and

even a person who merely facilitated or introduced

7 Supra para 3.

14 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 parties for such transactions would fall within its

scope and ambit.

15. The Commissioner, after a perusal of the MOUs,

held that the activities undertaken by the respondent

were in the nature of those performed by a ‘Real

Estate Agent/Real Estate Consultant’ and therefore,

the respondent would squarely fall within the scope

of Sections 65(88) and 65(89) of the Finance Act,

1994. The Commissioner further held that the fixed

average rate, as stipulated in the MOUs, included the

profit margin of the respondent, and such profit

constituted consideration received for rendering

services in relation to purchase, registration, and

allied activities of land for SICCL, thereby attracting

levy of service tax. Accordingly, the consideration

received by the respondent was held liable to service

tax in terms of Section 65(105)(v) of the Finance Act,

1994.

15 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

16. The Commissioner also concluded that the

respondent suppressed the fact of rendering taxable

services to its client from 1st October, 2004, onwards;

failed to obtain service tax registration as ‘Real Estate

Agent’; and failed to file the prescribed ST-3 returns

under the Service Tax Rules, 1994 thereby entitling

the Directorate General to invoke the extended period

of limitation by virtue of proviso to Section 73(1) of

the Finance Act, 1994. It was further observed that,

had the Directorate General not initiated the inquiry

against the respondent, the said non-payment of

service tax would not have been unearthed.

B. IMPUGNED JUDGMENT

17. The respondent, being aggrieved by the

adjudication order passed by the Commissioner

raising the demand of service tax, afflicting interest,

and penalties, preferred an appeal to the Appellate

16 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 Tribunal. Upon consideration of the submissions

advanced by the parties and upon appraisal of the

material placed on record, the Appellate Tribunal

reversed the findings of the Commissioner and

consequently allowed the appeal filed by the

respondent thereby, setting aside the demand of

service tax and levy of penalty.

18. The Appellate Tribunal, upon perusal of the

MOUs, observed that the agreement between the

respondent and SICCL extended beyond mere

acquisition of land and encompassed ancillary

activities including verification of the title deeds of the

landowners, obtaining necessary documents from

the competent authorities, and facilitating other

procedural formalities. It further noted that the

remuneration or consideration payable to the

respondent for undertaking these activities was not

specifically quantified in the MOUs. The

17 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 remuneration was rather structured in the nature of

a profit-loss margin, contingent upon the difference

between negotiated land price and fixed average rate.

19. The Appellate Tribunal held that as the MOUs

did not specify any fixed remuneration in form of

commission etc. for the acquisition of the land, both

parties to the MOUs acted as principals in the

transaction, rather than as principal and agent.

20. The Appellate Tribunal further held that there

was no mala fide intention or deliberate act of

suppression on the part of the respondent, as the

transactions were conducted through proper banking

channels and duly recorded in the respondent’s

books of account and thus, invocation of extended

period of limitation was not justified.

21. The said judgment and order dated 21st June,

2019, passed by the Appellate Tribunal is the subject

matter of challenge in these appeals.

18 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 C. SUBMISSIONS ON BEHALF OF THE APPELLANT

22. Shri V. Chandrashekara Bharathi, learned

counsel appearing for the appellant, vehemently and

fervently contended that the impugned judgment is

contrary to the settled principles of law and

inconsistent with the facts available on record.

23. To buttress the above contention, learned

counsel for the appellant, drew the Court’s attention

to the fact that the title to the concerned lands rested

solely with the individual owners, and at no point of

time the respondent ever gained ownership of the

said lands, a position further fortified by the fact that

the respondent merely obtained Powers of Attorney

from the individual landowners and subsequently

transferred the said lands to SICCL.

24. It was thus projected on behalf of the appellant

that the respondent acted as a mere facilitator for

19 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 sale of lands to the benefit of SICCL, earning a

commission on amounts exceeding the fixed average

rate under the MOUs, thereby qualifying as a ‘Real

Estate Agent’ under Section 65(88) of the Finance

Act, 1994, and thus the services rendered by the

respondent against the MOUs were unquestionably

taxable under Section 65(105)(v) of the Finance Act,

1994.

25. Shri Bharathi relied upon a judgment of the

High Court of Chhattisgarh at Bilaspur in

Chhattisgarh Steel Castings (P) Ltd. v. Union of

India8, and contended that in a similarly situated

case, the High Court held that a transaction cannot

be regarded as a mere sale and purchase of

immovable property, where a person, from the outset,

enters into an agreement to acquire property with the

intention of subsequently selling it to another. Such

8 2020 (34) G.S.T.L. 70.

20 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 an activity falls within the ambit of a ‘Real Estate

Agent’ as defined under the Finance Act, 1994, rather

than constituting a simple transaction of sale and

purchase of immovable property.

26. The learned counsel for the appellant further

justified the stance of the revenue in invoking the

extended period of limitation under the proviso to

Section 73(1) of the Finance Act, 1994, contending

that the respondent despite being fully aware that its

activities merely constituted facilitation of sale in

favour of SICCL, and were covered under a ‘Real

Estate Agency’ contract, wilfully suppressed facts to

evade payment of service tax.

D. SUBMISSIONS ON BEHALF OF THE RESPONDENT

27. E-converso, Shri Balbir Singh, learned senior

counsel appearing for the respondent, opposed the

submissions advanced by the learned counsel for the

21 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 appellant, contending that by no stretch of

imagination, the transactions in question can

constitute a ‘service’ and that the respondent does

not fall within the definition of ‘Real Estate Agent’

under Section 65(88) of the Finance Act, 1994, and

therefore it cannot be subjected to service tax.

28. Learned senior counsel, while placing reliance

upon a recent judgment of this Court in Union of

India v. Future Gaming Solutions Pvt. Ltd.9,

contended that the respondent assumed the risk and

reward of loss and profit in land transactions. The

mere fact that ultimate conveyance may have been

executed directly in favour of SICCL does not alter the

economic reality that the respondent acted as an

intervening trader, bearing the procurement risk and

earning or losing on the spread.

9 (2025) 5 SCC 601.

22 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

29. Lastly, the learned senior counsel, contended

that the entire demand is barred by limitation, as it

was issued beyond the limitation period provided

under Section 73 of the Finance Act, 1994, and the

extended period of limitation could not have been

invoked, as the appellant failed to demonstrate any

positive act of suppression on part of the respondent.

To fortify his submissions, learned senior counsel,

relied upon a recent judgment of this Court Stemcyte

India Therapeutics Pvt. Ltd. v. CCE & ST10 and

contended that the appellant is required to prove that

the respondent deliberately suppressed facts with

intent to evade tax, in order to invoke the extended

period of limitation of five years. Mere non-payment

of tax does not constitute suppression, nor does the

law impose any obligation upon the respondent to

10 2025 SCC OnLine SC 1412.

23 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 seek clarification regarding applicability of service

tax.

E. ANALYSIS

30. Having given our thoughtful consideration to

the submissions advanced at bar and upon perusal

of the impugned judgment and order and the

materials placed on record, following issues fall for

our consideration:

i. Whether the respondent rendered services

falling within the category of ‘Real Estate

Agent’, taxable under Section 65(105)(v)

read with Section 65(88) of the Finance

Act, 1994, during the period from 1st

October, 2004 to 31st March, 2007?

ii. Whether the appellant has established

that the respondent deliberately

suppressed facts, thereby justifying the

24 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 invocation of the extended period of

limitation under the proviso to Section

73(1) of the Finance Act, 1994?

I. Whether the respondent rendered services falling within the category of ‘Real Estate Agent’, taxable under Section 65(105)(v) read with Section 65(88) of the Finance Act, 1994, during the period from 1st October, 2004 to 31st March, 2007?

31. For adjudicating the issue at hand, it is

pertinent to examine the relevant statutory

provisions, namely Sections 65(88) and 65(89) of the

Finance Act, 1994, which define the terms ‘Real

Estate Agent’ and ‘Real Estate Consultant,’

respectively, and are reproduced as follows:

“Section 65(88): ‘real estate agent’ means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting of real estate and includes a real estate consultant;

Section 65(89): ‘real estate consultant’ means a person who renders in any manner, either directly or indirectly, advice, consultancy or

25 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate.”

32. A careful reading of both these definitions, i.e.,

‘Real Estate Agent’ and ‘Real Estate Consultant’ as

provided under Sections 65(88) and 65(89) of the

Finance Act, 1994, respectively, reveals that both the

definitions are centred on the rendering of services,

whether in form of sale, purchase, leasing or renting

of real estate and/or in form of advice, consultancy

or technical assistance, in relation to procurement,

acquisition, development, construction,

maintenance, marketing, or management of real

estate or activities related to construction.

33. The specific argument advanced on behalf of the

respondent was that the transactions undertaken by

it, pursuant to which the lands in question were

provided to SICCL constituted outright sale

26 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 transactions and did not involve component of

providing any service, assistance, advice,

consultancy, etc. in relation to any of the activities

referred to in Sections 65(88) and 65(89) of the

Finance Act, 1994. To test the veracity of this

argument, the relevant clauses from the MOUs

entered into between the parties would have to be

perused and the same, as extracted in paragraphs

10.1-10.8 of the impugned judgment, are reproduced

hereinbelow for a proper appreciation of the nature

and scope of the transactions in question:

“10.1 The process of land purchase shall be in a compact contiguous, adjacent and plot wise or block wise manner starting from the roadside. 10.2 The appellant shall furnish the title papers and all other necessary documents with reference to the land proposed, within 15 days from the date of signing of the MOU.

10.3 Thereafter the appellant shall obtain and furnish, each and every other necessary permission/ approval from the Government body/competent authority, or other regulatory authority, required for transfer of the land proposed, and further arrange for the purchase of land proposed under the MOU, at the average

27 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 agreed rate per acre, within two months or within such further time at the discretion of Sahara India. 10.4 All expenses for obtaining proof of title and approval (except for ULC clearance) required for the transfer of title in the land shall be borne by second party, that is the appellant, and all the supporting documents furnished in respect thereof shall reflect the latest position of the ownership of land. 10.5 Thereafter scrutinising the papers relating to title, the first party- Sahara India shall enter into an agreement of sale with the owners of the land, after payment of advance/signing amount, in favour of the cultivators/owner of the land. 10.6 Thereafter having completed and covered the entire land(area) under the MOU through agreement(s) to sell, the appellant shall thereafter get the sale deed(s) executed by the cultivators/owners of land in favour of Sahara India or its nominees, after payment of remaining amount towards purchase. Where there are several co-owners in a ‘Khata’ (entry in the land record) the second party/appellant shall ensure that all the co-

owners execute the document (sale deed) at one time. In no case shall any document be executed by part co-owners. That in the case the land is owned by minor, lunatic or an insane person, appellant will get appropriate guardianship certificate from the competent court/authority and agreement to sell shall be executed only with such guardian. In case any dispute is pending before any civil court or revenue Court, regarding title, share or for partition of the property, the appellant will try its best to get the settlement arrived among the Co sharers/co owners and agreement to sell shall be executed accordingly.

28 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 10.7 That it is the responsibility of the appellant for bringing the cultivators/land owners to the Registrar office along with the necessary documents and photograph and to witness execution/registration of the documents. 10.8 That all payments to the Kashtkar/land owners, shall be made through pay orders/demand drafts/account payee cheques. That the-difference, if any, or the amount being actually paid to the cultivators /owner of land and the average rate, shall he payable to the appellant. Such payment of difference to the appellant shall be regulated in such a manner so as to ensure the performance of the terms and conditions of the MOU. The first party Sahara India may under discretion withhold maximum up to 10 per cent of the amount payable to the second party/appellant to ensure peaceful/proper demarcation and possession, mutation and construction of the boundary wall of the entire land.

In case, the appellant fails to fulfil its obligations as stipulated in the terms of the contract/MOU, the same can be terminated by Sahara India and the withheld amount is liable to be forfeited. All expenses for registration of documents relating to the transfer or agreement of sale, etc., shall be borne by Sahara India. Further all expenses of mutation of land in the office of the concerned Revenue authority shall be borne by Sahara India and the appellant shall be required to coordinate and to do the work of Pairvi in respect thereof in the concerned offices and shall provide to Sahara India all necessary help so as to get the work of mutation completed.”

29 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

34. For a person to qualify as a real estate agent,

there has to be a contract of agency, to be specific, an

estate agency agreement. Expanding the definition of

‘Real Estate Agent’ under Section 65(88) of the

Finance Act, 1994, it becomes clear that, in order to

fall within its ambit, an individual or the entity must

be engaged in rendering a service and such service

must be in relation to sale, purchase, leasing or

renting of a real estate and includes a real estate

consultant.

35. The phrase ‘Real Estate’ is not expressly defined

under the Finance Act, 1994, but according to the

Oxford English Dictionary, the expression denotes

property in the form of land or buildings, and may

additionally refer to the business of selling houses or

land for building.

30 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

36. Moreover, Section 2(zn) of the Real Estate

(Regulation And Development) Act, 2016 defines ‘real

estate project’ to mean:

“the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.”

37. The understanding of the term ‘Real Estate’, as

drawn from the above discussion, provides the

necessary context for interpreting the scope of a ‘Real

Estate Agent’ under the Finance Act, 1994. While

‘Real Estate’ encompasses land, buildings, and

associated development works, as well as commercial

activities connected with such property, it is essential

to note that the definition of a ‘Real Estate Agent’

31 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 under Section 65(88) of the Finance Act, 1994 is

service-centric.

38. Thus, for a person to be covered under the

definition of ‘Real Estate Agent’, there must be

attributable to such person, an act of rendering

service. The section does not cover a direct

transaction of sale and/or purchase inter se between

two individuals or entities, as the case may be.

Likewise, ‘Real Estate Consultant’ is a person who

renders services in form of advice, consultancy or

technical assistance for the purposes as set out in

Section 65(89) of the Finance Act, 1994. The common

thread passing through both the provisions is that

the person concerned must be engaged in rendering

of services, advice, consultancy or technical

assistance for sale and purchase of land or for

development, construction, evaluation, conception,

etc. of real estate.

32 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

39. It is only the contract of agency inter se between

the service provider or the consultant, as covered

under Sections 65(88) and 65(89) of the Finance Act,

1994, and the principal engaging such service

provider or the consultant, for the purpose specified

in these two sections, which establishes the agency

relationship. The consideration paid for the services

or the consultancy provided under such contract in

form of commission or otherwise, would be the

taxable event as defined under Section 65(105)(v) of

the Finance Act, 1994.

40. In the present case, admittedly, the respondent

was not engaged by the SICCL for any such service.

The terms of MoUs (supra) which we have carefully

examined, do not indicate that there existed any

relationship of principal and agent between SICCL

and the respondent. The MoUs simply referred to a

fixed rate per plot which SICCL would pay to the

33 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 respondent for every chunk of the land provided by

the respondent to SICCL. There was no element of

any service charges or consultancy charges being

levied by the respondent on such sale transactions.

The gains accruing to the respondent would arise

from the difference of sale consideration over and

above the fixed sale price settled in the MoUs. For this

purpose, the respondent would be required to

negotiate with the original landowners and facilitate

the transfer of the lands to SICCL. It is noteworthy

that there existed a probability of the respondent

even suffering losses in the transaction if the value of

the land exceeded the fixed price agreed upon in the

MoUs. This would not be possible if the contract was

for providing services based on commission or in any

other form.

41. Thus, we are of the firm opinion that the

Appellate Tribunal did not commit any error in

34 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 holding that the respondent did not act as a real

estate agent or a consultant while acting in

furtherance of the MoUs entered with SICCL. The

profitability of the respondent was contingent upon

the rate at which land was procured by it from the

sellers.

42. As a matter of fact, the transactions inter se

between the respondent and SICCL under the said

MoUs are covered within the exceptions as

enumerated in the definition of ‘Service’ under

Section 65B(44)(a)(i) of the Finance Act, 1994 which

reads as follows:

“44. ‘service’ means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—

(a) an activity which constitutes merely,––

(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or

(ii) a transaction in money or actionable claim;

…” (Emphasis supplied)

35 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

43. The respondent admittedly transferred title of

land to SICCL after negotiating the price thereof with

the owners and procuring a Power of Attorney to

execute the sale deeds. Hence, these activities were

purely of sale/conveyance of immovable property

which clearly falls within the exception as provided

under Section 65B(44)(a)(i) of the Finance Act, 1994,

reproduced supra.

44. Thus, we are of the firm opinion that the

transactions/activities undertaken by the

respondent with SICCL did not bring it within the

purview of ‘Real Estate Agent’ or ‘Real Estate

Consultant’ as defined under Sections 65(88) and

65(89) of the Finance Act, 1994, respectively. These

transactions were not undertaken for service

charges, commission, agency or consultancy but

were plain and simple transactions of sale of land,

36 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 which are expressly protected under the exception

clause to the definition of the ‘Service’ referred to

supra.

45. Hence, the Commissioner erred in raising the

demand of tax and imposing penalty upon the

respondent by the Order dated 30th September, 2013

and therefore, the view taken by the Appellate

Tribunal in setting aside the said Order does not

suffer from any infirmity warranting interference of

this Court.

II. Whether the appellant has established that the respondent deliberately suppressed facts, thereby justifying the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994?

46. Although, the core issue has been decided

against the appellant, it remains necessary to

examine the present issue, which concerns allegation

of deliberate concealment and suppression of facts by

37 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 the respondent, thereby justifying the invocation of

extended period of limitation by the Directorate

General under the proviso to Section 73(1) of the

Finance Act, 1994.

47. The proviso to Section 73(1) of the Finance Act,

1994 provides for the recovery of service tax not

levied or paid or short-levied or short-paid under

circumstances where the normal limitation period

has expired. While the general period of limitation is

eighteen months from the relevant date, the proviso

to Section 73(1) permits recovery beyond this period

when there is deliberate suppression of facts or mis-

statement by the service recipient or provider. The

provision is therefore intended to deal with cases of

intentional concealment, ensuring that taxpayers do

not escape liability by withholding material

information or misrepresenting facts that would

affect the determination of tax.

38 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

48. It is trite that for invocation of extended period

of limitation under the proviso to Section 73(1) of the

Finance Act, 1994, the appellant was required to

prove deliberate suppression and concealment of the

material facts on the part of the respondent to evade

the tax liability.

49. Recently, this Court in Stemcyte India

Therapeutics (P) Ltd. (Supra), while considering the

scope of the extended period of limitation under

Section 73 of the Finance Act, 1994, held as follows:

“9.3 It is a settled principle of law that, for the Department to invoke the extended period of limitation, there must be an active and deliberate act on the part of the assessee to evade payment of tax. Mere non-payment of tax, without any element of intent or suppression, is not sufficient to attract the extended limitation period… … 9.4 Therefore, in the absence of fraud, collusion, wilful mis-statement, or suppression of facts with an intent to evade payment of service tax, the invocation of the extended period of limitation under section 73 of the Finance Act, 1994 is wholly unwarranted. Mere non-payment of service tax, by itself, does not justify the invocation of the extended limitation period. Accordingly, the show-

cause notice issued by the Department is clearly

39 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 time-barred. On this ground alone, the impugned order deserves to be set aside.”

50. The extended period of limitation of five years

under the proviso to Section 73(1) of the Finance Act,

1994, was invoked by the Directorate General on the

ground that the respondent allegedly failed to file

periodical Service Tax returns in ST-3, as required

under Section 70 of the Finance Act, 1994, for the

period commencing from 1st October 2004. The Show

Cause Notice issued in this regard stated that, by

such omission, the respondent did not wholly and

truly disclose material facts, with a purported

deliberate intention to evade service tax, thereby

contravening the provisions of Section 68 of the

Finance Act, 1994.

51. In its reply to the said Show Cause Notice, the

respondent explained that, being under a bona fide

belief that no service tax was payable on the

40 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 payments received under the MoUs, it had neither

wilfully suppressed nor mis-stated any material

facts, and therefore, there was no mala fide intention

or deliberate act of suppression to evade the payment

of service tax.

52. Admittedly, all the transactions inter se between

the respondent and SICCL were through valid

banking channels and thus, there was no element of

concealment or suppression by the respondent

warranting invocation of the extended period of

limitation by the Directorate General under the

proviso to Section 73(1) of the Finance Act, 1994.

53. The appellant has failed to adduce any evidence

or establish that the respondent engaged in wilful or

deliberate suppression of material facts, and there is

nothing on record to suggest that the respondent

acted with any intention to mislead the authorities or

evade payment of service tax. To be specific, the

41 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025 appellant failed to satisfy the Court that the

respondent was under any obligation to seek

clarification as to whether its activities with SICCL

would bring it within the scope and ambit of a real

estate agent.

F. CONCLUSION

54. In light of the aforesaid discussion, we have no

hesitation in holding that the impugned judgment

does not suffer from any infirmity warranting

interference by this Court. Accordingly, we hold that

the transactions in question neither fall within the

definition of a ‘Real Estate Agent’ nor that of a ‘Real

Estate Consultant’ under the Finance Act, 1994.

55. As a consequence of the above discussion, we

do not find any merit in these appeals which are

dismissed as such.

42 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

56. Pending application(s), if any, shall stand

disposed of.

….……………………J. (J.B. PARDIWALA)

….……………………J. (SANDEEP MEHTA)

NEW DELHI;

NOVEMBER 10, 2025.

43 CIVIL APPEAL NO(S). 11744 – 11745 OF 2025