The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Small Scale Industries (SSI) exemption is available if rental services do not exceed Rs. 10 Lakhs.
Small Scale Industries (SSI) are industries that manufacture, produce and render services on a small or micro scale level. In India, several SSIs exist in various fields such as handicrafts, toys, weaving, pickle making, food products, etc.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that Notification No. 33/2012-ST dated 20.06.2012 prescribes exemption from payment of tax if the amount received in the previous Financial Year is less than the threshold limit of Rs. 10 lakhs. On this principle, the Commissioner (Appeals) have categorically recorded the finding that the aggregate value of such rental services does not exceed Rs. 10 lakhs in a particular one financial year and therefore, the appellant is entitled to the benefit of SSI exemption. Consequently, they are not liable to pay any service tax on service.
The appellant, Rani Durgavati Vishwavidyalaya, Jabalpur (M.P.) is established under Madhya Pradesh Vishwavudyalaya Adhiniyam, 1973 and is a Central University incorporated under the Central University Act, 2009. The university is engaged in imparting higher education to the aspirant students. University was granting affiliation to various colleges for which they were collecting charges viz. affiliation fees from the affiliated colleges.
The university collected Rs. 11,85,56,128 on account of affiliation fees for the period July 2012 to Dec. 2016. The university also provided renting of immovable property service to various parties during the period July 2012 to Dec. ‘2016 and collected Rs. 9,25,250 on account of rental income on which service tax leviable works out to be Rs. 1,21,917.
Therefore, a show cause notice was issued to them and subsequently the proceedings were finalized by the adjudicating authority by which demand of service tax of Rs. 1,58,18,823/- was confirmed with interest and equal mandatory penalty. An appeal was filed by the appellant which has been allowed by the order. Reviewing the order, the revenue has filed the appeal.
The issue raised was whether the appellant is entitled to the benefit of SSI exemption on renting of immovable property service as the aggregate value of such rental services does not exceed Rs. 10 lakhs in a particular financial year.
The tribunal affirmed the impugned order was affirmed and the appeal filed by the department was dismissed.
Case Details
Case Title: Principal Commissioner of CGST & Central Excise, Jabalpur Versus M/s. Rani Durgawati Vishwavidyalaya
Case No.: Service Tax Cross Application No. 50103 of 2020 In Service Tax Appeal No. 52139 of 2019
Date: 15/05/2025
Counsel For Appellant: Anand Narayan
Counsel For Respondent: None
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