2026-VIL-49-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Transfer of land development rights, Exclusion from definition of 'service' - Appellants are land owning companies who entered into memorandums of understanding (MOUs) with M/s Omax Limited. Under the MOUs, the appellants acquired land in their own names for and on behalf of Omax, and Omax was granted the rights to develop, construct, and market the projects - Demanding service tax on the transfer of land development rights, treating it as a 'deemed service' under the Finance Act, 1994 - Whether the appellant is liable to service of transfer of land development rights – HELD - The transfer of land development rights does not amount to rendering of services under the head of 'development rights'. The transfer of development rights is immovable property and, therefore, stands excluded from the definition of 'service' under Section 65B(44) of the Finance Act, 1994 - the issue of transfer of development rights does not amount to rendering of services under the head of “development rights” is squarely covered in favour of the assessee in the earlier decisions. The Revenue argument that the present case is distinguishable from the earlier decisions is rejected on the basis that the SCNs were issued to the landowning companies (the appellants) and not to the developer (Omax). This distinction does not alter the basic principles enunciated in the earlier decisions, which is that the transfer of land development rights does not fall within the ambit of service tax - the impugned orders are set-aside and the appeals are allowed
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