Custom, Excise & Service Tax Tribunal
Krishi Upaj Mandi Samiti vs Commissioner, Central Excise & ... on 16 January, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - III
Service Tax Appeal No. 51262 of 2022
[Arising out of Order-in-Appeal No. 378(SM)/ST/JPR/2021 dated 21.12.2021
passed by the Commissioner (Appeals), CGST & CX, Jaipur]
M/s. Krishi Upaj Mandi Samiti
...Appellant
1) Sawai Madhopur, Rajasthan
2) Rahul Lakhwani/Sanjay Jhanwar, Chir Amrit Law Chambers,
6th Floor, Unique Destination, Opp. Times of India,
Tonk Road, Jaipur-302015.
VERSUS
Commissioner of Central Excise and Customs,
Central Goods and Service Tax, Jaipur I ...Respondent
NCR Building, Statue Circle, C-Scheme, Jaipur - 302005 APPEARANCE:
Shri Rahul Lakhwani & Shri Mihir Jhanwar, Advocates for the Appellant Ms. Jaya Kumari, Authorized Representative for the Respondent CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) DATE OF HEARING: 12.11.2025 DATE OF DECISION: 16.01.2026 FINAL ORDER NO. 50082/2026 RAJEEV TANDON The present appeal arises out of the order-in-appeal dated 21.12.2021 passed by the Ld.Commissioner (Appeals), CGST & CX, Jaipur upholding the demand of Service Tax for an amount of Rs.1,12,210/- along with applicable interest and imposing penalty under section 76 & 77 of the Finance Act, 1994.2
Service Tax Appeal No.51262 of 2022
2. The appellant established under the aegis Rajasthan Agriculture Produce Market Act, 1961 1 with the objective "better regulation of buying and selling of agricultural produce and the establishment of markets for agricultural produce in the state of Rajasthan", regulates the sale of agricultural produce in notified markets. For the purpose, a market fee is charged for various activities carried out like issuing licence to traders, agents, factory/cold storage owners and/or other buyers of agricultural produce. The appellant also lends out shops to traders for which allotment fee or lease amount is collected from such traders to whom the said premises are leased out. It is also the appellant's contention that they are an instrumentality of the State as enshrined in the Constitution with well laid out functions required to be undertaken. As per Section 9 of the Market Act the appellant is required to maintain and manage, market yards within the market area and requires the Samiti to provide necessary facilities for marketing of agricultural produce so as to protect the agriculturists from being exploited. For fulfillment of the said obligations, the appellant constructs shops/godowns within its own premises and allots them to specified class of persons for purpose of trading any agricultural produce in the appellant samiti premises. For the purpose of the allotment activity, the Samiti collects certain sums from the traders/farmers as fixed by the government which are uniform throughout the state of Rajasthan.
3. The revenue authorities however view the said acts of lending out shops etc., on part of the appellant, as rendering the service of "Renting of Immovable Property", as in terms of section 65(90) of 1 The Market Act 3 Service Tax Appeal No.51262 of 2022 the Finance Act, 1994, the said service comprises of renting, letting, leasing, licensing etc. of immovable property for furtherance of the business activities. The notice further alleges that the said activity would not be included in the Negative List of Services vide clause (d) of section 66D of the Finance Act; as sub-clause (iv) thereof specifically included :
"Section 66D(d) services relating to agriculture or agriculture produce by way of -
(i) .........
(ii) .........
(iii) .........
iv. - renting or leasing of agro-machinery or vacant land with or
without a structure incidental to its use"
and did not include renting of shops or other built structures and would apply only to renting of vacant land. It further elaborated that the vacant land could have a structure for housing of water pumps, agricultural implements, fodder or agricultural produce storage shed etc., but would not apply to shops as the entry did not cover renting primarily of built structures like shops.
4. In appellate proceedings, we find a very fallacious interpretation and understanding of the subject matter by the ld.
authority. Thus while in para 3.4 & 3.5 of the order, taking due note of the precedent Tribunal's decision cited by the appellant, it is noted as under:
"3.4 The issue regarding levy of service tax on Allotment Activity carried by the Appellant has already been decided in the favour of Mandi Samiti by the Hon'ble CESTAT. Furthermore, the Appellant has specifically submitted in its reply dated 15.05.2018 that the issue raised in the Impugned SCN had been considered by the Hon'ble CESTAT in Final Order dated 25.05.2017 wherein it was held that the activities of the Appellant relating to renting of shops by 4 Service Tax Appeal No.51262 of 2022 Agricultural Produce Marketing Committee (hereinafter referred as 'APMC) are covered under negative list. Thus, the Appellant are not liable to pay any service tax in respect of the said activities. The issue regarding leviability of service tax on the renting of shops by APMC after 01.07.2012; has already been decided in favour of the Appellant vide Hon'ble CESTAT's Final Order dated 25.05.2017. That the Hon'ble CESTAT in the case of Krishi Upaj Mandi Samiti vs. Commissioner of C. Ex. &5.t., Jaipur-I & II [2017 (4) G.S.T.L. 346 (Tri-Del)), has specifically held that the renting of shops by the Mandi Samitis are covered under the Negative List of services post 01.07.2012 and thus no service tax is leviable on the same. The Adjudicating Authority has merely reproduced the CESTAT Order and has failed to provide any reasoning as to why the same was not followed by the Adjudicating Authority. The said action of the Adjudicating Authority of not following the Order of the higher forum, is against the principles of judicial discipline as the matter which has already been settled by the higher authority i.e., Hon'ble CESTAT cannot be again put into question by a lower authority. Reliance may be placed on the following cases- (i) UOI and Others Vs. Kamalakshi Finance Corporation Ltd. [1991 (55) ELT 133 (S.C.), (ii) Videocon International Ltd. vs. Commissioner of Customs (Appeal No. C/662/92), (iii) Welcure Drugs & Pharmaceuticals Ltd. vs. CCE., Jaipur (2018 (15) G.S.T.L. 257 (Raj.)); (iv) Bicoin Ltd. v. Commissioner of Service Tax [2007 [7] S.T.R. 214 (Tri-Bang.)]. From perusal of the above judgments, it is clear that the Adjudicating Authority was required to follow the order of the Hon'ble CESTAT and could not have raised the said demand. In the Impugned OIO, the Adjudicating Authority referred to the CESTAT's Order, however, without providing any cogent reason and explanation the said order was disregarded. In case wherein the higher authority has passed any order which has similar facts and circumstances, the Jower authority has to follow the same following the judicial principle. In case, the lower authority differs, then cogent reason for the same has to be provided. Reliance is placed on the case of Automark Industries (India) Ltd. vs. Commissioner of Commercial Tax (Revision Defective Nos. 268 to 287 of 2011).
3.5 The Department has challenged only the issue related to penalty and extended period before the High Court of Rajasthan at Jaipur in the matter of Krishi Upaj Mandi Samiti, Kota and the Hon'ble High Court has decided the said case in favour of the Mandi Samiti. Thus, the issue in relation to 'Renting of Immovable Property by APMC has also been accepted by the department and has attained finality. Thus, following the principle of judicial discipline, the findings reached by the Hon'ble High Court of Rajasthan and the Hon'ble CESTAT along-with the interpretation are binding on the Adjudicating Authority. However, the Adjudicating Authority contravened the principles of 5 Service Tax Appeal No.51262 of 2022 Judicial discipline by not following the CESTAT Order dated 25.05.2017. The Adjudicating Authority has also failed to mention the reason for not following the CESTAT'S Order dated 25.05.2017. Due to the aforesaid act of the Adjudicating Authority, the Impugned OIO deserves to be set aside. The copy of the High Court Order dated 21.02.2018 is annexed herewith and marked as Annexure-G. The same issue regarding taxability of "Renting of Immovable Property Services' in case of KUMS, Churu and some other Mandi Samitis has been decided in their favour vide OIA No.259- 271(SRM)ST/JDR/2017 dated 10.11.2017 holding that the said services of 'Renting of Immovable Property' fall under Section 66D(d) of the Act, hence not liable to service tax in view of the CESTAT's order. The copy of the aforesaid OIAs is attached as Annexure-H. This shows that the Department has been following the order of the Hon'ble Tribunal and has granted relief pursuant to it, thus it is prayed that CESTAT order should be followed in case of all Mandi Samitis on the same basis from inception stage of adjudication. In light of the above submissions and bare perusal of the ratio laid by Hon'ble CESTAT it is apparently clear that the matter of interpretation in question is already settled by Hon'ble CESTAT in the favour of Appellant. Therefore, the Adjudicating Authority has grossly erred in not following the CESTAT's Order and thereby contravened the judicial discipline principle."
5. As can be noted above, the said passages also contain references of similar orders passed by departmental authorities, occupying the said activity to be included in terms of clause 66D(d)(iv). Thereafter, deliberating on the issue the ld.Commissioner (Appeals) adopts certain fanciful and cheeky arguments in support of his finding and contention and holds that "avanton shulk" (allotment fee) is an activity meeting the definition of Renting of Immovable Property under section 65(90a) which was beyond the purview of the Negative List and not included therein under section 66D. Yet another ridiculous reasoning flows from what has been recorded by the ld.Commissioner(Appeals) in para 5.6 of his order. The same is reproduced below verbatim and reads as :
6
Service Tax Appeal No.51262 of 2022 "5.6 On cursory reading of the provisions Section 66D, it is not coming out that 'Renting of Immovable Property" in respect of agriculture or agriculture produce, as is being provided by the appellant, is included in the negative list. At (d)(iv) of Section 66D, Renting of vacant land with or without structure incidental to its use has been mentioned, but I find that that is not the case of the appellant. The appellant is renting out shops/buildings/sheds to individuals or firms, who uses them for their business. I find that services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce have though found place in the list at (d)(vii).
Now, another questions arises as to whether renting out shops/buildings/sheds to individuals or firms is covered under the said clause, I find that the said clause provides exemption to service provided by Agricultural Produce Marketing Committee or Board or by a commission agent for sale or purchase only. In other words, activity of sale and purchase by Agricultural Produce Marketing Committee or Board or by a commission agent is exempted by virtue of this clause. Thus, I hold that the service of renting out shops/buildings/sheds to individuals or firms does not find place in the negative list and is taxable in the hand of the appellant also."
6. It is the appellant's contention that this Tribunal vide its Final Order No.53436-53500/2017 dated 25.05.2017 in respect of a bunch of 65 appeals in the matter of Krishi Upaj Mandi Samity relating to taxability of such allotment activity had held that Service Tax liability on such allotment activity does not arise for the period beyond 1st July 2012, thereby setting aside the original order passed by the lower authority in the matter. It is their case that despite the aforesaid order of the Tribunal, the Revenue authorities sought information from the appellants with regard to the details of rent received during the period 1st April 2015 to 31.03.2016 and on which basis the appellant was issued the impugned show cause notice, demanding service tax under the category of 'renting of 7 Service Tax Appeal No.51262 of 2022 immovable property' (refer section 65B(41), 65B(44), 66E(a) of the Finance act, 1994) on the services of such allotment rendered by them. The appellant strongly holds that in view of the Tribunal's order they were of the strong belief that no Service Tax was leviable in the matter. However, the issuance of the impugned show cause notice dated 16.04.2018 seeking Service Tax amount as aforesaid along with interest and proposal for imposition of penalty came to them as a rude shock and utter surprise.
7. As stated earlier, following due process, the aforesaid amount was confirmed by the adjudicating authority and so upheld in appeal. The appellant is now before us, being aggrieved by the aforesaid course of action of the Revenue.
8. We have also heard the Ld.AR for the Revenue in the matter, who supports the impugned order and justifies the demand.
9. At the outset it is the plea of the appellant that the impugned show cause notice has been issued and adjudicated by the Superintendent, CGST & ST, Range-XXVII, Sawai Madhopur, who has been appointed as CGST Officer in terms of section 3 of the CGST Act and therefore they contend that the show cause notice has not been validly issued as per the provisions of Finance Act. The entire proceedings therefore are bereft of appropriate jurisdiction. This plea of the appellant to our mind is not worth any credence. It is an undisputable fact that the powers to issue and adjudicate Service Tax matters ipso facto is vested upon the Central Excise authority, who by virtue of the enabling provisions of the statute were deemed to be an officer under the Finance Act, 1994. By virtue of Section 83, and Section 65B(55) of the Finance Act, 1994 several of the provisions of Central Excise Act as also words 8 Service Tax Appeal No.51262 of 2022 and expressions not defined under the Finance Act, have been deemed to be enacted into the Finance Act and were thereby made applicable to the Service Tax law.
10. As for the merits of the case, it cannot be denied that the impugned issue is no more res integra and has already been decided by the Tribunal in the appellant's own case cited earlier Krishi Upaj Mandi Samiti v. Commissioner of Central Excise & Service Tax, Jaipur I & II [2017 (4) GSTL 346 (Tri.-Del.)], wherein it was categorically held that post 01.07.2012 i.e. with the enactment of the Negative list no Service Tax was payable in respect of shops/sheds and such premises leased out to traders/others for storage etc. of agricultural produce in marketing area. Indeed the said order passed by the Tribunal has been affirmed by the apex court [2022 (58) GSTL 129 (SC)] as well. Relevant para 11 of the Tribunal's order reads as under :
"11. It is clear that the appellants, being an Agricultural Produce Marketing Committee, is excluded from the tax liability in terms of the above provisions. Services relating to agricultural produce by way of storage of warehousing are in the negative list. The scope of negative list has been examined by the Board in the Education Guide dated 20-6-2012. Para 4.4.9 of the said Guide states as below:-
4.4.9 Would leasing of vacant land with green house or a storage shed meant for agricultural produce be covered in the negative list?
Further, on APMCs, the guide clarified as below :-
4.4.11What are the services referred to in the negative list entry pertaining to Agricultural Produce Marketing Committee or Board?
Agricultural Produce Marketing Committees or Boards are set up under a State Law for purpose of regulating the marketing of agricultural produce. Such marketing of agricultural produce by provision of facilities and amenities 9 Service Tax Appeal No.51262 of 2022 like, sheds, water, light, electricity, grading facilities etc. They also take measures for prevention of sale or purchase of agricultural produce below the minimum support price. APMCs collect market fees, licence fees, rents, etc. Services provided by such Agricultural Produce Marketing Committee or Board are covered in the negative list. However any service provided by such bodies which is not directly related to agriculture or agricultural produce will be liable to tax e.g. renting of shops or other property."
11. Thus, to issue such notices and confirm them, despite binding precedent is nothing short of promoting a great degree of vexatious and frivolous litigation. The department would do well to take a serious look into the same and ensure appropriate steps are taken to prevent such recurrence. Needless to state that it is the like of such instances that shakes public trust and faith in the system that is so necessary and vital for promotion of an equitable, fair and just tax administration.
12. As this Tribunal has rendered an elaborate finding in the matter in its decision referred supra, we do not find adequate reasons to spell out the same once again. Following the said order of the Tribunal we have no hesitation to state that the Revenue has not been able make out any justifiable case in the matter and the impugned order needs to be set aside as it is passed indeed in gross & blatant violations of the principles of judicial discipline.
13. We are also aghast and dismayed, by the callous manner, in invocation of extended period of limitation under Section 73(1) proviso by the Revenue in this case. To allege suppression of fact or misstatement with intent to evade payment of service tax (which of course is otherwise also not leviable), by the jurisdictional authority in respect of a body set up in terms of the statutory provisions. 10
Service Tax Appeal No.51262 of 2022 The authorities ought to have at least given a thought, as to who would stand to gain, were it to be so. For government bodies, it has been oft-held by courts and tribunals that in case of government bodies, whose functioning is otherwise bound by specific statutory provisions, there is obviously a rebuttable presumption about the non-existence of any of the ingredients to invoke extended limitation. The onus under such circumstances to establish the existence of the necessary ingredients to so do and issue notice, becomes all the more rigorous and it cannot be merely so stated and invoked at a drop of a hat.
14. In view of the discussions aforesaid and our findings in the matter, we find the order of the lower authority is completely shorn of merits and liable to be dismissed. We therefore set aside the same and allow the appeal filed.
(Pronounced in the open Court on 16th January 2026) (BINU TAMTA) MEMBER (JUDICIAL) (RAJEEV TANDON) MEMBER (TECHNICAL) sm