University Entitled to SSI Exemption on Renting of Immovable Services when Aggregate Income is Below ₹10 Lakh: CESTAT [Read Order]

In a recent decision on the tax exemption entitlements of educational institutions, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) of New Delhi bench held that the university  is eligible for Small Scale Industry ( SSI ) exemption in respect of rental income received from renting of immovable property, as the aggregate income during the relevant financial year remained below the ₹10 lakh threshold.

The tribunal, consisting of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member), rejected the appeal filed by Revenue against M/s. Rani Durgavati Vishwavidyalaya, Jabalpur (M.P.) set up under Madhya Pradesh Vishwavudyalaya Adhiniyam, 1973 and a Central University registered under the Central University Act, 2009, against the Order-in-Appeal dated 29.04.2019, thus upholding the exemption awarded by the Commissioner (Appeals).

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The matter involved a demand of service tax amounting to ₹1,58,18,823 on various counts including affiliation fees and rental income accrued between July 2012 and December 2016. Specifically, ₹9,25,250 was collected as rental income during the said period, attracting a proposed tax liability of ₹1,21,917 under the heading “Renting of Immovable Property Services.”

However, the Commissioner (Appeals) had concluded that the university qualified for exemption under Notification No. 33/2012-ST dated 20.06.2012, which grants SSI exemption to service providers whose total taxable services in a financial year do not exceed ₹10 lakhs.

The tribunal upheld this view, citing that the aggregate value of the rental services provided by the university did not breach the ₹10 lakh threshold in any individual financial year under review. Therefore, the university was squarely entitled to claim the exemption, and no service tax was payable on such income.

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The bench stated that “On the second issue of service tax on the activity of Renting of Immovable Property Service, we find that both the, Hon’ble High Court of Karnataka in the case of Rajeev Gandhi University of Health Sciences (supra) followed by the Tribunal in the case of M/s. Jiwaji Vishwavidhyalaya (supra) has held 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 such service.”

To Read the full text of the Order CLICK HERE

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Principal Commissioner of CGST & Central Excise, Jabalpur vs M/s. Rani Durgawati Vishwavidyalaya , 2025 TAXSCAN (CESTAT) 524 , Service Tax Appeal No. 52139 of 2019 , 16 May 2025 , Shri Anand Narayan