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Informist, Monday, Nov. 10, 2025

 

NEW DELHI – The Supreme Court Monday rejected Commissioner of Service Tax, New Delhi's plea seeking to levy service tax on Elegant Developers for the acquisition, development and management of land parcels for Sahara India Commercial Corporation Ltd.'s real estate projects at Sahara City Homes in Rajasthan, Gujarat and Haryana. The apex court said that Elegant Developers was not a real estate agent as its memorandum of understanding with Sahara India only involved a simple transaction of sale of land.

 

"Thus, we are of the firm opinion that the transactions/activities undertaken by the respondent with SICCL (Sahara India Commercial Corp. Ltd.) 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," said the top court. These transactions were not undertaken for service charges, commission, agency or consultancy but were plain and simple transactions of sale of land which are expressly protected under the exception clause to the definition of the 'service' under Section 65B(44)(a)(i) of the Finance Act, 1994.

 

The top court said that the Commissioner of Service Tax erred in raising a demand of INR 104.56 million and imposing a penalty upon Elegant Developers in 2013. The view taken by Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi in setting aside the commissioner's order in 2019 does not suffer from any infirmity warranting interference of the top court, said a bench of Justice J.B. Pardiwala and Justice Sandeep Mehta.

 

In the memorandum of understanding between the parties, Sahara India had agreed to pay Elegant Developers a 'fixed average rate' per acre of land, which was to be identified, divided, and demarcated by the latter, along with complete documentation and other related formalities. Sahara India had agreed to purchase land at the fixed average rate per acre, which included the entire cost of the land as well as the development expense. 

 

The memorandum stated that Elegant Developers was responsible to carry out the purchase of the land in contiguous blocks, divide and demarcate the entire land into blocks of 20 to 30 acres. Elegant Developers was to furnish title papers and other necessary documents for the land and obtain permissions and approvals from the concerned authorities for land transfer. Elegant Developers had to bring forward the landowners for negotiations, registration, and other formalities while Sahara India was to bear all related expenses, including stamp duty, registration charges and mutation fees.  End

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

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