The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand raised against actor Rajinikanth in a dispute related to the renting of immovable property.
The case involved property owned by the actor in Chennai that had been leased for hotel operations through an agreement with a hospitality company. The tax department had earlier demanded service tax under the category "Renting of Immovable Property Service."
However, the tribunal held that buildings used for hotels are specifically excluded from service tax under the law applicable at that time.
Tribunal's Key Observation
The tribunal noted that the legislative intent was clear: Properties used for accommodation such as hotels fall outside the scope of taxable renting of immovable property services.
Since the property was used for hotel operations, the tribunal concluded that the transaction does not qualify as a taxable service under the service tax provisions.
Earlier Legal Precedent
The tribunal also relied on an earlier decision that had been affirmed by the Supreme Court , which clarified that renting buildings for hotel use is not subject to service tax under the relevant provisions.
Because of this settled legal position, the tribunal ruled that the service tax demand confirmed by the department cannot be sustained.
Final Outcome
The Chennai CESTAT bench set aside the impugned orders passed by the tax authorities and allowed the appeals filed by Rajinikanth.
The tribunal also stated that the appellant would be eligible for consequential relief as per law. The order was pronounced on 4 March 2026.
Click here to view the official copy of the notification
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