The Delhi bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in the case of M/s. CDP Real Estate versus C.C.E., Delhi where it has been ruled that service in respect of the properties situated in India can’t be treated as “Export of services “and they are liable to pay the service tax.
The bench comprising of Judicial Member S.K. Mohanty and Technical Member B.Ravichandran, confirmed the service tax liability while setting aside the impugned order.
The Appellant provided the taxable services like Management or Business Consultant Service (MBCS), Business Auxiliary Service (BAS), etc. During the year under consideration, appellant entered into the agreement with Quebec Inc., Canada for providing investment advisory services to their clients in India. For the services appellant receiving service fee in convertible foreign exchange and thereafter, filed his return of income claiming the refund of cenvat credit lying unutilized in its books of accounts.
Denying the proposition laid by Appellant department initiated show cause notice proposing to reject the refund claim on the ground that the appellant was engaged in rendering the service under the category of “Real Estate Advisory Service” (REAS).
The appellant claimed that the said service rendered in respect of the properties situated in India and therefore, the services cannot be treated as export of service. Eventually adjudicating authority rejected the refund claim and held that service provided by appellant was REAS instead of MBCS therefore, the benefit under the Export of Services Rules, 2005 cannot be granted.
Upon appeal Commissioner (Appeals) has rejected the appeals filed by the appellant and upheld the adjudication order.
Being further aggrieved Appellant approached Delhi CESTAT by contesting the same. The sole issue in the instant case was regarding the activities of appellant would fall within the ambit of MBCS and BAS as claimed by the appellant or would fall under the category of REAS, as held by the lower authorities.
In order to confirm the nature of activities carried by appellant Tribunal opinioned that it is required to discuss the contents of the agreement entered into between the appellant and the overseas client M/s.Quebec.
On close observation, bench found that appellant advisory services confined to advising with respect to investment opportunities. The counsel for Assessee also contended the same referred in the agreement and further submitted that fee received by Assessee were for the advice and are not linked to any acquisition of any real estate.
The bench had a considered view that appellant rendered the services to the overseas client as advisor of the investment opportunities in the Indian company, which is clearly covered within the definition of MBCS and also pressed the decision of Tribunal in the case of AMP Capital Advisors India Pvt. Ltd. Vs. CST.
Finally, the bench ordered that the activities rendered by the appellant would come within the purview of “MBCS” and the appellant is entitled to the refund benefit.
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