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CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI

REGIONAL BENCH – COURT No. I

Service Tax Appeal No.41478 of 2016 (Arising out of Order in Original No.CHN-SVTAX-001-COM-110/2015-2016-ST 1, dated

31.03.2016 passed by the Principal Commissioner of Service Tax, Service Tax I Commissionerate, Newry Towers, No.2054-I, II Avenue, Anna Nagar, Chennai 600 040)

Shri N Devarajan ...Appellant No. A-80, 3^rd Avenue Anna Nagar, Chennai 600 102

Versus

Commissioner of CGST & Central Excise ...Respondent Newry Towers, No.2054, 2^nd Avenue Anna Nagar, Chennai 600 040

APPEARANCE:

Shri Murugappan, Advocate for the Appellant Shri N Satyanarayana, Authorised Representative for the Respondent

CORAM:

HON’BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)

HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)

FINAL ORDER No.40464/2026

DATE OF HEARING:09.01.2026 DATE OF DECISION : 06.04.2026

Per Mr. AJAYAN T.V.

Shri N Devarajan, the appellant herein, has preferred this appeal aggrieved by the Order in Original No.CHN-SVTAX- 001-COM-110/2015-2016-ST 1 dated 31.03.2016 (impugned order)

passed by the Adjudicating Authority.

2. The relevant facts are that the appellant is a registered service provider of renting of immovable property service. Based on intelligence that the appellant was providing renting of immovable property service for commercial purpose and was not paying service tax on the consideration received, the Department called for the details of income

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returns, profit and loss a/cs and copies of invoices raised for the period in 2008 – 2009, 2012 – 2013 to determine the service tax liability. On the basis of the income tax returns provided indicating income from house property, when the appellant was further enquired, the appellant informed vide its letter dated 04.12.2013, that four immovable property belonging to him namely A-80, A-89, A-79, and AL -61 all located at Ann Nagar, Chennai was being let out, out of which three were rented out for commercial purpose and AL – 61 was not let out for commercial purpose till March 2011. The appellant informed that since the rental income received from renting out AL -61, being rent for residential

purpose, it does not attract service tax.

3. Soon thereafter, the appellant opted for VCES Scheme and vide declaration dated 26.12.2013, declared a service tax liability of Rs.7,59,897/- for the period from October 2007 – March 2011 and paid the said amount. The Department, being of the view that the property located at AL -61 was rented out to M/s. Iswaryalaxmi Properties (P) Ltd. for commercial purpose, contrary to the claim made by the appellant, issued a Show Cause Notice dated 19.12.2014 alleging that the VCES declaration filed by the appellant was substantially false as per the provision of Sec.111 of the Finance Act, 2013 and proposing a demand of service tax of Rs.14,60,604/- along with applicable interest for the period from October 2007 to December 2012. The Notice also proposed to appropriate the amount already paid as well as imposition of penalties. After due process of law, the Adjudicating Authority, vide the impugned order, demanded a re-quantified amount of Rs.10,13,552/-, confining it to the period upto 2010 – 11, while imposing equivalent penalty under Section 78 of the Finance Act, 1994 (Act) and a penalty of RS.10,000/- under Sec.77 of the Act. Aggrieved,

the appellant has preferred this appeal.

4. Shri Murugappan, Ld. Advocate appearing for the appellant submitted that the Adjudicating Authority, in spite of conceding that the lease agreement dated 30.03.2009 in respect of the property situated at AL – 61 entered into between lessor and M/s. Iswaryalaxmi Properties Pvt. Ltd indicated that the lessor has agreed to demise the property for a

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period of 11 months from 01 April 2009 (renewable up to a period of 2 years) for the residential use of its Managing Director; has nevertheless rejected the appellant’s claim on the ground that the appellant has artificially mentioned in the agreement t