{"id":5397,"date":"2025-08-19T17:37:42","date_gmt":"2025-08-19T12:07:42","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=5397"},"modified":"2025-08-19T17:37:42","modified_gmt":"2025-08-19T12:07:42","slug":"cestat-one-time-premium-on-lease-liable-to-service-tax","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/cestat-one-time-premium-on-lease-liable-to-service-tax","title":{"rendered":"CESTAT | One-Time Premium on Lease Liable to Service Tax"},"content":{"rendered":"<pre>Case Details:<a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000402215\/one-time-premiumsalami-for-leasing-land-or-plot-is-liable-to-service-tax-cestat\"> <span class=\"NormalTextRun SCXW267845000 BCX0\" data-ccp-parastyle=\"Body-All Documents\" data-ccp-parastyle-defn=\"{&quot;ObjectId&quot;:&quot;f54e3151-7552-5563-bc14-dd1598e94375|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[469775450,&quot;Body-All Documents&quot;,201340122,&quot;2&quot;,134234082,&quot;true&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocuments&quot;,335572020,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777844,&quot;Book Antiqua&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,335559740,&quot;280&quot;,201341983,&quot;1&quot;,335559739,&quot;0&quot;,335551550,&quot;6&quot;,335551620,&quot;6&quot;,469777929,&quot;Body-All Documents Char&quot;,201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777843,&quot;Calibri&quot;,201341986,&quot;1&quot;,268442635,&quot;24&quot;]}\" data-ccp-parastyle-linked-defn=\"{&quot;ObjectId&quot;:&quot;d1cb5994-2cf1-5883-8af4-faa182bd9769|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777843,&quot;Calibri&quot;,469777844,&quot;Book Antiqua&quot;,201341986,&quot;1&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,268442635,&quot;24&quot;,469775450,&quot;Body-All Documents Char&quot;,201340122,&quot;1&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocumentsChar&quot;,335572020,&quot;1&quot;,134231262,&quot;true&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,469777929,&quot;Body-All Documents&quot;,469778324,&quot;Default Paragraph Font&quot;]}\">Rajasthan State Industrial Development &amp; Investment Corporation Ltd Versus<\/span> <span class=\"NormalTextRun SCXW267845000 BCX0\" data-ccp-parastyle=\"Body-All Documents\">Commissioner, Central Excise &amp; Service Tax Commissionerate, Alwar<\/span><\/a><span class=\"NormalTextRun SCXW267845000 BCX0\" data-ccp-parastyle=\"Body-All Documents\"><a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000402215\/one-time-premiumsalami-for-leasing-land-or-plot-is-liable-to-service-tax-cestat\"> (2025) 33 Centax 73 (Tri.-Del)<\/a>\r\n\r\n<\/span><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Justice\u00a0<span id=\"111170000000012606\">Dilip Gupta<\/span><\/strong>, President and<strong>\u00a0<span id=\"111170000000029953\">Ms. Binu Tamta<\/span><\/strong>, Member (J) and <strong>Shri\u00a0<span id=\"111170000000037667\">P.V. Subba Rao<\/span><\/strong>, Member (T)<\/li>\n<li>\n<div><strong>\u00a0S\/Shri\u00a0<span id=\"111170000000166968\">Shriram Shreedharan<\/span>\u00a0<\/strong>and\u00a0<strong><span id=\"111170000000118121\">Kunal Agarwal<\/span>,<\/strong> Advs., for the Appellant.<\/div>\n<\/li>\n<li>\n<div><strong>S\/Shri\u00a0<span id=\"111170000000105256\">Rajpal Sharma<\/span>\u00a0<\/strong>and\u00a0<strong><span id=\"111170000000134986\">Shambhoo Nath<\/span>,<\/strong> Special Counsel, for the Respondent.<\/div>\n<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p><span class=\"TextRun SCXW84267937 BCX0\" lang=\"EN-IN\" xml:lang=\"EN-IN\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW84267937 BCX0\" data-ccp-parastyle=\"Body-All Documents\" data-ccp-parastyle-defn=\"{&quot;ObjectId&quot;:&quot;f54e3151-7552-5563-bc14-dd1598e94375|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[469775450,&quot;Body-All Documents&quot;,201340122,&quot;2&quot;,134234082,&quot;true&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocuments&quot;,335572020,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777844,&quot;Book Antiqua&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,335559740,&quot;280&quot;,201341983,&quot;1&quot;,335559739,&quot;0&quot;,335551550,&quot;6&quot;,335551620,&quot;6&quot;,469777929,&quot;Body-All Documents Char&quot;,201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777843,&quot;Calibri&quot;,201341986,&quot;1&quot;,268442635,&quot;24&quot;]}\" data-ccp-parastyle-linked-defn=\"{&quot;ObjectId&quot;:&quot;d1cb5994-2cf1-5883-8af4-faa182bd9769|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777843,&quot;Calibri&quot;,469777844,&quot;Book Antiqua&quot;,201341986,&quot;1&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,268442635,&quot;24&quot;,469775450,&quot;Body-All Documents Char&quot;,201340122,&quot;1&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocumentsChar&quot;,335572020,&quot;1&quot;,134231262,&quot;true&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,469777929,&quot;Body-All Documents&quot;,469778324,&quot;Default Paragraph Font&quot;]}\">The appellants had allotted and leased industrial plots to various persons and, in addition to periodical rentals, collected a one-time premium\/salami amount from the lessees. The Department of Revenue proposed levy of Service Tax on such one-time premium under the category of \u2018Renting of Immovable Property service\u2019 in terms of Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994. Subsequently, Section 65B(44) of the Finance Act, 1994 introduced a statutory definition of \u2018service\u2019 to mean any activity carried out for consideration and included a \u2018declared service, while Section 66E(a) specifically declared \u2018renting of immovable property\u2019 as a service. The appellants contended that a one-time premium\/salami was a non-recurring amount in the nature of consideration for entering into an agreement to lease, not covered under \u2018renting\u2019, which envisaged only recurring rental payments. They further relied upon Section 105 of the Transfer of Property Act, 1882 to argue that the premium represented consideration distinct from rent and that the exclusion contained in Section 65B(44)(a)(i) of the Finance Act, 1994 operated to exempt such transactions. Conflicting Division Bench rulings on the issue led the original referral Bench to place the matter before the Larger Bench of the <\/span><span class=\"NormalTextRun SCXW84267937 BCX0\" data-ccp-parastyle=\"Body-All Documents\">CESTAT<\/span><span class=\"NormalTextRun SCXW84267937 BCX0\" data-ccp-parastyle=\"Body-All Documents\">.<\/span><\/span><span class=\"EOP SCXW84267937 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:0,&quot;335559740&quot;:280}\">\u00a0<\/span><\/p>\n<h2><i>CESTAT Held<\/i><\/h2>\n<p><span class=\"TextRun SCXW164247243 BCX0\" lang=\"EN-IN\" xml:lang=\"EN-IN\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW164247243 BCX0\" data-ccp-parastyle=\"Body-All Documents\" data-ccp-parastyle-defn=\"{&quot;ObjectId&quot;:&quot;f54e3151-7552-5563-bc14-dd1598e94375|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[469775450,&quot;Body-All Documents&quot;,201340122,&quot;2&quot;,134234082,&quot;true&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocuments&quot;,335572020,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777844,&quot;Book Antiqua&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,335559740,&quot;280&quot;,201341983,&quot;1&quot;,335559739,&quot;0&quot;,335551550,&quot;6&quot;,335551620,&quot;6&quot;,469777929,&quot;Body-All Documents Char&quot;,201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777843,&quot;Calibri&quot;,201341986,&quot;1&quot;,268442635,&quot;24&quot;]}\" data-ccp-parastyle-linked-defn=\"{&quot;ObjectId&quot;:&quot;d1cb5994-2cf1-5883-8af4-faa182bd9769|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:[201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Book Antiqua&quot;,469777842,&quot;Times New Roman&quot;,469777843,&quot;Calibri&quot;,469777844,&quot;Book Antiqua&quot;,201341986,&quot;1&quot;,469769226,&quot;Book Antiqua,Times New Roman&quot;,268442635,&quot;24&quot;,469775450,&quot;Body-All Documents Char&quot;,201340122,&quot;1&quot;,134233614,&quot;true&quot;,469778129,&quot;Body-AllDocumentsChar&quot;,335572020,&quot;1&quot;,134231262,&quot;true&quot;,335551500,&quot;0&quot;,134233111,&quot;true&quot;,469777929,&quot;Body-All Documents&quot;,469778324,&quot;Default Paragraph Font&quot;]}\">The CESTAT held that the one-time premium\/salami collected by the appellants was leviable to Service Tax under \u2018Renting of Immovable Property service\u2019.<\/span> <span class=\"NormalTextRun SCXW164247243 BCX0\" data-ccp-parastyle=\"Body-All Documents\">It observed that though the Finance Act, 1994 did not define the term \u2018lease\u2019, Section 105 of the Transfer of Property Act, 1882 defined a lease to include both premium and rent. It was held that premium or salami, being a one-time consideration for being let into possession and for creation of tenancy rights, was an integral part of the lease transaction and therefore fell within the scope of Service Tax. The Tribunal rejected the contention that premium paid for an agreement to lease was outside the ambit of taxability, stating that the statutory definition of \u2018renting\u2019 included leasing in its entirety. Further, with the introduction of Section 65B(44) of the Finance Act, 1994<\/span><span class=\"NormalTextRun SCXW164247243 BCX0\" data-ccp-parastyle=\"Body-All Documents\">,<\/span><span class=\"NormalTextRun SCXW164247243 BCX0\" data-ccp-parastyle=\"Body-All Documents\"> defining \u2018service\u2019 and Section 66E(a) declaring \u2018renting of immovable property\u2019 as a service, such premium was equally taxable. The plea that the exclusion under Section 65B(44)(a)(i) applied was also rejected as being contrary to legislative intent. The Larger Bench accordingly answered the reference in favour of the Department of Revenue, holding that one-time premium or salami amounts are liable to Service Tax under Renting of Immovable Property service<\/span><\/span><span class=\"EOP SCXW164247243 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559739&quot;:0,&quot;335559740&quot;:280}\">\u00a0<\/span><\/p>\n<h2>List Of Case Cited<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=%5B1981%5D%206%20Taxman%20289%20(Mad.)&amp;itemType=AP\">A.R. Krishnaurthy\/A.R. Rajagopalan v. Commissioner of Income Tax<\/a> \u2014 [1981] 6 Taxman 289 (Mad.) \u2014\u00a0<i>Relied on<\/i>\u00a0[Para 10]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2019%20(31)%20G.S.T.L.J84%20(Tribunal)&amp;itemType=AP\">City and Industrial Development Corporation of Maharashtra Ltd. v. Commissioner<\/a> \u2014 2019 (31) G.S.T.L.J84 (Tribunal) \u2014\u00a0<i>Referred<\/i>\u00a0[Paras 1, 2, 19]<\/li>\n<li>City and Industrial Development Corporation of Maharashtra Ltd. v. Commissioner \u2014 Writ Petition No. 1696 of 2021, decided on 11-11-2022 by Bombay High Court \u2014\u00a0<i>Referred<\/i>\u00a0[Paras 2, 19]<\/li>\n<li>Commissioner of Income-Tax v. Panbari Tea Co. Ltd. \u2014 1965 57 ITR 422 (S.C.) \u2014\u00a0<i>Relied on<\/i>\u00a0[Paras 8, 30, 31]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2015%20(38)%20S.T.R.%201062%20(Tribunal&amp;itemType=AP\">Greater Noida Industrial Development Authority v. Commissioner<\/a> \u2014\u00a0<a id=\"anchor_75878.19031941006\"><\/a>2015 (38) S.T.R. 1062 (Tribunal)\u00a0\u2014\u00a0<b>Overruled<\/b>\u00a0[Paras 1, 17, 18, 32, 34]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2016%20(45)%20S.T.R.%2060%20(Tripura)&amp;itemType=AP\">Hobbs Brewers India Pvt. Ltd. v. Union of India<\/a> \u2014\u00a0<a id=\"anchor_98235.60099194465\"><\/a>2016 (45) S.T.R. 60 (Tripura)\u00a0\u2014\u00a0<i>Referred<\/i>\u00a0[Paras 36, 37]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2018%20(5)%20TMI%201363-CESTAT%20Mumbai&amp;itemType=AP\">Kagal Nagar Parishad v. Commissioner<\/a> \u2014 2018 (5) TMI 1363-CESTAT Mumbai \u2014\u00a0<b>Overruled<\/b>\u00a0[Paras 1, 18, 32, 34]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=1971%20(2)%20SCC%20521%20%E2%80%94&amp;itemType=AP\">Maharaja Chintamani Saran Nath Sah Deo v. C.I.T.<\/a> \u2014 1971 (2) SCC 521 \u2014\u00a0<i>Relied on<\/i>\u00a0[Para 9]<\/li>\n<li>Member For The Board of Agriculture Income Tax v. Sindhurani Chaudhurani \u2014 Decided on 24-4-1957 by Supreme Court \u2014\u00a0<i>Relied on<\/i>\u00a0[Para 7]<\/li>\n<li>Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income-Tax \u2014 Decided on 13-5-1943 \u2014\u00a0<i>Relied on<\/i>\u00a0[Para 6]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2020%20(39)%20G.S.T.L.%20266%20(Tribunal)&amp;itemType=AP\">Starcity Entertainment Private Limited v. Commissioner<\/a> \u2014\u00a0<a id=\"anchor_38795.990891296926\"><\/a>2020 (39) G.S.T.L. 266 (Tribunal)\u00a0\u2014\u00a0<b>Approved<\/b>\u00a0[Paras 1, 20, 36]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Rajasthan State Industrial Development &amp; Investment Corporation Ltd Versus Commissioner,&hellip;<\/p>\n","protected":false},"author":16,"featured_media":5417,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,51,63],"tags":[],"class_list":["post-5397","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-excise-service-tax","category-news-excise-service-tax","category-est-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CESTAT | One-Time Premium on Lease Liable to Service Tax<\/title>\n<meta name=\"description\" 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