CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH – COURT NO. – III [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, 6^th 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. The appellant established under the aegis Rajasthan Agriculture Produce Market Act, 1961¹ 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

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 a