Custom, Excise & Service Tax Tribunal
Rajesh Kumar And Associate vs Ludhiana on 24 March, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
(i) Service Tax Appeal No. 60354 of 2018
[Arising out of Order-in-Original No. LUD-EXCUS-001-APP-208-17-18 dated
29.12.2017 passed by the Commissioner of Service Tax, C.R. Building, Ludhiana]
M/s Rajesh Kumar & Associates ......Appellant
C/o ram Gali Near Nirdhan Niketan Mandhir,
Dhobi Mohalla, Ferozepur City
Punjab 152002
VERSUS
Commissioner of Central Excise and ......Respondent
Service Tax, Ludhiana
GST Bhawan, F-Block, Rishi Nagar
Ludhiana, Punjab 141001
WITH
(ii) Service Tax Appeal No. 60355 of 2018 (Rajesh Kumar &
Associates)
[Arising out of Order-in-Original No. LUD-EXCUS-001-APP-209-17-18 dated
27.12.2017 passed by the Commissioner of Service Tax, C.R. Building, Ludhiana]
(iii) Service Tax Appeal No. 60357 of 2018 (Ashok Kumar & Co-
Owners)
[Arising out of Order-in-Original No. LUD-EXCUS-001-APP-206-17-18 dated
28.12.2017 passed by the Commissioner of Service Tax, C.R. Building, Ludhiana]
(iv) Service Tax Appeal No. 60358 of 2018 (Rajesh Kumar &
Associates)
[Arising out of Order-in-Original No. LUD-EXCUS-001-APP-2010-17-18 dated
27.12.2017 passed by the Commissioner of Service Tax, C.R. Building, Ludhiana]
APPEARANCE:
Shri Vikrant Kackria, Advocate for the Appellants
Shri Ram Niwas, Authorized Representative for the Respondent
2 ST/60354,60355,
60357 & 60358/2018
CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL)
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER NO. 60276-60279/2026
DATE OF HEARING: 23.03.2026
DATE OF DECISION:27.03.2026
S.S. GARG:
These four appeals arising out of the impugned orders dated
27.12.2017, 28.12.2017 & 29.12.2017, whereby, the Commissioner
(Appeals) has denied the benefit of Notification No. 6/2005-ST dated
01.03.2025 and accordingly rejected the appeals of the appellant.
1.2 Since, the issue involved in all the four appeals is identical,
therefore, all the four appeals are taken up together for the purpose of
discussion and decision. For the sake of convenience, the facts of Appeal
No. ST/60354/2018 are taken up.
2. Briefly as per the allegation of the Department, M/s Rajesh Kumar
& Associates are engaged in providing taxable service covered under the
category of "Renting of Immovable Property Services" falling under
Section 65 (105) (zzzz) of Finance Act, 1994 as it existed prior to
01.07.2012 and in terms of Section 66B of the Act read with Section 65B
(41) and Section 65(B) (44) of the Act as it existed w.e.f. 01.07.2012;
appeared to have contravened the provisions of section 68, 69 and 70 of
the Act read with Rules 4, 5, 6 & 7 of the Service Tax Rules, 1994, in as
much as they had neither applied for registration nor discharged their
service tax liability for the said services and did not file any service tax
returns for the relevant period.
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60357 & 60358/2018
2.1 During the course of audit of M/s Food Corporation of India,
Bathinda by the internal audit party, it was observed that they had hired
the godowns from M/s Punjab State Warehouse Corporation (hereinafter
referred to as 'PSWC'). On enquiry from PSWC, it was revealed that they
had further hired godowns of private parties and the appellant was
among them. Accordingly, show cause notice proposing recovery of
service tax amounting to Rs. 2,15,583/- was issued to the appellants
vide C.No. ST-V/STC/SNG/RK/76/14/573 dated 16.02.2015, for the
period 2013-14. The case was adjudicated vide Order-in-Original No.
21/CE&ST/AC/DIV-MOGA/2015-16 dated 28.03.2016. Aggrieved by the
said order, the appellant filed appeal before the Commissioner who
rejected the same. Hence, the present appeal.
3. Heard both the parties and perused the material on record.
4. Learned Counsel for the appellant submits that the impugned
order is not sustainable in law and is liable to be set aside as the same
has been passed without properly appreciating the facts and the law;
and binding judicial precedents. He further submits that the show cause
notice issued in the case against M/s Rajesh Kumar & Associates
whereas, there is no entity as such known by the name Rajesh Kumar &
Associates. It is not understood as to from where the Department has
created this entity known as Rajesh Kumar & Associates. He further
submits that the said property on which the service tax has been
demanded is being owned by following co-owners, namely, Raman
Kumar, Usha Rani, Ravinder Kumar, Neelua Bajaj, Neeta Bajaj and
Ashok Kumar. He further submits that the show cause notice is not
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legally sustainable and the share of the rent received by other co-owners
cannot in any manner be demanded from Sh. Rajesh Kumar who is only
a co-owner and has received rent attributable to his share.
4.1 He further submits that this issue is no more res integra and has
been considered by this Tribunal in catena of decisions and he has relied
upon the following decisions:
(i) Commissioner of Central Excise Vs, Deoram
Vishrambhai Patel-2015 (40) (STR 1146 (tri);
(ii) Anil Saini Vs. Commissioner of C. Ex.
Chandigarh-1-2017(51) STR 38 (Tri)
(iii) KM Building Tenant's Association Vs.
Kuthuparmba Municipality-2013 (30) STR 237
(Ker)
(iv) Jindal Vegetable Products Ltd. Vs.
Commissioner of C. Ex-2013 (31) STR 367
(Tri.Del)
(v) M/s Chander Sharma Ashok Sharma and
Associates vide Final Order No. 61465/2025 dated
07.10.2025
(vi) Final Order No. 61485-61486/2025 dated
08.10.2025 in the case of Bansal Co-owners.
(vii) Final Order No. 61600/2025 dated
14.10.2025 in the case of Ram Singh and Co-
owners
He further submits that the only issue involved in the present appeals
relates to denial of Small-scale Exemption to various co-owners of the
property. He further submits that it has been wrongly held in the
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adjudication order that the property is eligible only for Small Scale
Exemption and the co-owners are not separately eligible for the
benefit of Small Scale Exemption vide Notification No. 33/2012.
4.2 On the other hand, learned authorized representative for the
department, reiterated the findings of the impugned order.
5. We have considered the submissions of both the parties and
perused the material on record, we find that the only issue involved in
the present case is whether the co-owners are individually entitled to
SSI exemption under Notification No. 6/2005-ST dated 01.03.2025 in
the capacity of each co-owner. Further, we find that in the present
case each co-owner is the owner of their respective share in the
property and the contract entered with PSWC is on behalf of all the
co-owner and the PSWC is paying rent to each co-owner separately
and the same is not disputed by the Department. Further, the PSWC
deducts the TDS under the PAN number of each co-owner separately
in respect of the payments made to them. The identical issue was
considered by the Bench in the case of M/s Ram Singh and Co-
owners vide Final Order No. 61600/2025 dated 14.10.2025
Service Tax Appeal No. 61817 of 2018, wherein, the identical
facts are involved and this Tribunal has recorded the findings as
under:
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"7. Further, we find that this issue was recently considered by this
Bench in the case of M/s Bansal & Co Owners vide Final Order No.
61485-61486/2025 wherein, it has been held in the following paras:
5. Heard both sides and perused the record of the case. We find that
the rent is being received by the individual co-owners separately. The
premises rented out is not registered in the name of the alleged AOP;
Revenue has not brought any evidence to indicate even the existence of
the AOP. It is not coming forth if the said AOP has been registered.
Under the circumstances, it is not understood as to how Revenue
attempted to tax the AOP. Interestingly, it appears that the adjudicating
authority or the Revenue were not clear in their approach. On the one
hand, they seek to recover service tax from a non-existent AOP and other
hand, seek to appropriate the service tax paid by the individual owners.
We find that no case has been made by the Department to demand
service tax from the alleged AOP. We find that co-ordinate Bench of this
Tribunal in Mumbai held in the case of Deoram Vishrambhai Patel (supra),
which was followed by this Bench in the case of Anil Saini (supra) held
that:
6. We have considered the submissions made by
both sides and perused the records. The issue that
needs to be decided in this case is whether the
respondent and his brothers are to be treated as
association of persons or other vise and service tax
liability on it arises, should be confined without the
benefit of the Notification No. 6/2005-S.T.
7. It is undisputed that the property which has been
rented out by the respondent and his brothers is
jointly owned property; Service Tax liability arises on
such renting of property.
8. On deeper perusal of impugned order, we find
that the first appellate authority has considered all the
angles in the dispute and came to the correct
conclusion. The findings of first appellate authority is
as under.
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"6.2 On mere reading of the Order-in-
Original, it is evident that the adjudicating
officer has considered above named four
persons as one person for determining tax
liability and imposition of penalties without
telling any legal basis for doing so. The
appellants have contested the Order in Original
mainly on the grounds that rented property
belongs to four separate persons (all brothers)
but the service tax has been demanded wrongly
by the department from the appellants by
clubbing the rent received by all the co-owners
and, therefore, the demand off tax is not
maintainable on this ground alone. In support
they have produced a City Survey Extract as
evidence regarding ownership of the rented
property which shows that the said property was
purchased in 2003 and is owned jointly by all
the four co-owners. Further, the lease
agreements with M/s. Max New York Life
Insurance Co. Ltd., Oriental Bank of Commerce,
Axis Bank, Kotak Mahindra Bank and HDFC
Standard Life Insurance Ltd. are also entered
into by the appellants in their individual
capacity, as per SCN also, all four co-owners
have obtained separate Registration Certificate
on 10-4-2012 and all the four co-owners
individually paid their Service tax liability along
with interest on 14-2-2012. Thus, the ownership
of the Property and providing of taxable renting
of immovable Property by the four appellants in
this case is in their individual capacity and,
therefore, their tax liability should have been
determined by considering their individual rental
receipts and not collective one. From the various
lease agreements made with above mentioned
Commercial firms, it cannot be disputed that
monthly rent was paid by the above named
concerns to each appellant after deducting tax
at their end.
6.3 From the show cause notice dated 19-10-
2012, it is evident that the appellants had
received rent as detailed below :-
--------
But as the rent was distributed equally among each of the appellant, it is evident that each of them received an amount lesser than Rs. 8 lakhs and 10 lakhs in the years 2007-08 and 2008-09 respectively which is below the exemption limit of eight lakhs and ten lakhs during the relevant period. The appellants were, therefore, not liable to pay service tax on the amounts received by them during these two 8 ST/60354,60355, 60357 & 60358/2018 years by virtue of Notification No. 6/2005-S.T., dated 1-3-2005. The appellant's case is also supported by the Tribunal's decision in the case of Dinesh K. Patwa v. CST, Ahmedabed which is referred in Para 3(ii) above. However, in the Financial Year 2009-10 and 2010-22, the receipt off rent by each appellant exceeded the statutory exemption limit of Rs. 10 lakhs and the appellants have paid service tax along with interest on their own before receipt of SCN. This fact is not disputed by the department also and no additional tax liability has been worked out for the said period in OIO.
6.4 Since the appellants were individually liable to pay service tax and eligible for the exemption under general exemption Notification 6/2005- S.T., dated 1-3-2005 during the period 2007-08 and 2008-09, no service tax was payable during the said period. Hence, the question of penalty under Section 76 for the said period does not arise. For the subsequent period i.e. 2009-10 & 2010-11, the appellants have already accepted their tax liability and paid Service tax along with interest on 14-2-2012. The said payment of service tax is certainly a delayed payment, but was made by the appellants on their own when they realized that their taxable value for renting of property had exceeded the exemption limit of Rs. 10 lakhs. The adjudicating authority has claimed in his order that the appellants paid service tax only after Department started investigation, but it is not supported by any evidence or the facts on record. The SCN or the OIO do not talk of any audit objection or Preventive action or any Inspection etc. on the basis of which not payment of service tax by the appellants was pointed out. Instead in the SCN, one statement of Shri Chandulal Vishrambhai Patel is only referred to which was recorded on 22-2-2012 which is 8 days after the appellants had paid service tax along with interest on their own. Thus, the claim of the appellant that they had paid service tax for the years 2009-10 and 2010-11 on their own initiative and there was no suppression of facts etc. on their part with any intention to evade service tax cannot be denied. Considering all these facts, I agree with the appellant's contention that this case was squarely covered under sub-section (3) of Section 73 which provided not to issue any notice under sub-section (1) of Section 73 if the service tax not levied or paid was paid along with interest by the person concerned before 9 ST/60354,60355, 60357 & 60358/2018 service of notice on him and informed the Central Excise Officer of such payment in writing. Further in Explanation 2 of the said sub section it is also clearly provided that no penalty under any of the provisions of the Act or the Rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. Hence, in fact no SCN was required to be issued in this case for recovery of service tax and imposition of penalty and even when it has been issued, no penalty under Section 76 or 78 is imposable in this case for the period 2009-10 and 2010-11."
9. It can be seen from the above reproduced findings of the first appellate authority, the conclusion arrived at is very correct, as co-owners of the property cannot be considered as liable for a Service Tax jointly or severally as Revenue has took identify the service provider and the service recipient for imposing service tax liability, which in this case, we find our individual. The conclusion arrived at by the first appellate authority is correct and he has confirmed the demand raised on the respondents by extending the benefit of Notification No. 6/2005-S.T. We do not find any reason to interfere in such a detailed order.
8. In view of the above, we find that the individual co-owners of the property cannot be held to be AoP and service tax cannot be demanded from the AoP. We also find that the value of the services provided by the individual co-owners in renting out the immovable property over the years is within the exemption provided under Notification no.33/2012 dated 20.06.2012. The issue is no longer res integra as discussed above. Hence, the impugned orders are set aside and the appeals are allowed."
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6. By following the ratio of the above said decision, we set aside the impugned orders and allow the appeals of the appellant with consequential relief if any, as per law.
(Order pronounced in the open court on 27.03.2026) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) Kailash