The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favour of JSW Steel Ltd., setting aside a service tax demand of ₹43.29 lakh raised on a lease transaction dating back to 2007-08.
The bench of C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) upheld JSW Steel’s arguments, holding that the retrospective application of the amendment was impermissible. The order stated that renting of vacant land for construction of structures to be used for furtherance of business or commerce became taxable only with effect from 1st July 2010, and not earlier.
The dispute arose after the Commissioner of Service Tax (Appeals) reversed an earlier order that had dropped proceedings against JSW Steel, holding the company liable for service tax, interest, and penalties under the category of “renting of immovable property service.” The tax liability was linked to an interest-free deposit of ₹3.50 crore received by JSW Steel for leasing 140.10 hectares of land to its group company, JSW Jaigarh Port Ltd.
While the original authority had ruled that the lease of vacant land for port and marine-related activities fell under the exclusion clause of Section 65(105)(zzzz) of the Finance Act, 1994, the appellate authority held otherwise. It observed that leasing land for port construction was in furtherance of business and commerce, thereby attracting service tax.
JSW Steel challenged this view before CESTAT, arguing that the demand was based on an amendment introduced only from July 1, 2010, whereas the lease deed was executed on January 15, 2008. The company relied on several judicial precedents, including rulings in Greater Noida Industrial Development Authority and Mormugao Port Trust, which clarified that renting of vacant land for commercial construction was not taxable prior to July 2010.
The tribunal set aside the demand of ₹43.29 lakh along with interest and penalties, granting full relief to JSW Steel.
Case Details
Case Title: JSW Steel Ltd Versus Commissioner of Service Tax
Case No.: Service Tax Appeal No: 85025 Of 2017
Date: 19/08/2025
Counsel For Appellant: Sachin Chitnis, Advocate
Counsel For Respondent: Adeeb Pathan, Deputy Commissioner (AR)
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