Commissioner Of Service Tax vs. M/S Elegant Developers

2025 INSC 1299
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)

J U D G M E N T
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 B. IMPUGNED JUDGMENT ............................................ 16
NEETU KHAJURIA
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
st
the Finance Act, 1994, during the period from 1
st
October, 2004 to 31 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.
1
2. The Commissioner of Service Tax, New Delhi
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
st
of 2018 dated 21 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,
2
Principal Bench, New Delhi in Service Tax Appeal
Nos. 50119-50120 of 2014.
3.
The M/s Elegant Developers, 1-C, Beli Road,
3
Allahabad, Uttar Pradesh was issued a Show Cause
nd
Notice dated 22 April, 2010 by the Commissioner
and pursuant to the adjudication thereof, the
th
Commissioner vide order dated 30 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
st
final judgment and order dated 21 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
4 th th
Understanding dated 25 December, 2002, 30
th
December, 2004, and 17 August, 2005, respectively
5
with M/s Sahara India Commercial Corporation Ltd.

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: -

6
CIVIL APPEAL NO(S). 11744 – 11745 OF 2025

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
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8. The Directorate General of Central Excise
6
Intelligence, Delhi Zonal Unit , 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
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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
st
taxable services to its client from 1 October, 2004,
onwards from the jurisdictional Service Tax
authorities.
10. Accordingly, the Directorate General issued a
nd
Show Cause Notice dated 22 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
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st
Hundred Seventy-Nine Only) for the period from 1
st
October, 2004, to 31 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
st
notice vide letter dated 1 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
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13. The said Show Cause Notice came to be
adjudicated by the Commissioner, after
consideration of the reply of the respondent, vide
th
Order No. 132/GB of 2013 dated 30 September,
2013, raising the demand of service tax and awarded
7
penalties as mentioned above .
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
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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
st
services to its client from 1 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
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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.
st
21. The said judgment and order dated 21 June,
2019, passed by the Appellate Tribunal is the subject
matter of challenge in these appeals.
18
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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
8
India , 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
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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
9
India v. Future Gaming Solutions Pvt. Ltd. ,
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
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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
10
India Therapeutics Pvt. Ltd. v. CCE & ST 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
st
Act, 1994, during the period from 1
st
October, 2004 to 31 March, 2007?
ii. Whether the appellant has established
that the respondent deliberately
suppressed facts, thereby justifying the
24
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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,
st
1994, during the period from 1 October,
st
2004 to 31 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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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)
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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,
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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
th
respondent by the Order dated 30 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
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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.
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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
st
period commencing from 1 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
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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
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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.
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56. Pending application(s), if any, shall stand
disposed of.


….……………………J.
(J.B. PARDIWALA)

….……………………J.
(SANDEEP MEHTA)


NEW DELHI;
NOVEMBER 10, 2025.



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