CESTAT: ‘Turnover’ for Exemption Includes Entire Business Revenue; Refund Claim of Jal Mahal Resorts Rejected

April 7, 2026 : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has held that for the purpose of exemption under Notification No. 25/2012-ST, the term “turnover” must be understood in its ordinary commercial sense as the total revenue of a business entity, and not merely the value of taxable services. On this basis, the Tribunal dismissed the appeal filed by M/s. Jal Mahal Resorts Pvt. Ltd., upholding the rejection of its refund claim.

The Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) was adjudicating a dispute concerning refund of service tax paid under the reverse charge mechanism on legal consultancy services.

The appellant had contended that its turnover in the relevant financial years was below the ₹10 lakh threshold prescribed under Entry No. 6 of Notification No. 25/2012-ST and that only taxable service income should be considered while computing turnover. It argued that other receipts such as nursery sales, machinery hire charges, and inteCESTAT Kolkata Sets Aside ₹6.25 Lakh Service Tax Demand Against Radiant Advertising, Rules Extended Limitation Not Invocablerest income ought to be excluded.

Rejecting this interpretation, the Tribunal emphasised that the notification refers to a “business entity with turnover” without qualifying it as “taxable turnover.” In the absence of a statutory definition under the Finance Act, 1994, the Tribunal adopted the common parlance meaning, holding that turnover encompasses the entire receipts reflected in the profit and loss account.

Relying on dictionary meanings and its own earlier decision in the appellant’s case, the Tribunal observed that turnover includes all streams of income, whether arising from taxable or non-taxable activities. It held that excluding non-taxable income would amount to an incorrect interpretation of the notification.

On facts, the Tribunal noted that the appellant’s aggregate turnover exceeded the prescribed threshold, amounting to ₹11.51 lakh in FY 2012–13 and ₹10.45 lakh in FY 2013–14 when all income sources were considered. Consequently, the appellant did not qualify as a small business entity eligible for exemption.

The Tribunal further relied on the Supreme Court’s ruling in Mafatlal Industries Ltd. to reiterate that refund claims must strictly satisfy statutory conditions. Since the appellant failed to meet the eligibility threshold, the refund was held to be untenable.

Accordingly, finding no infirmity in the impugned order, the Tribunal upheld the rejection of the refund claim and dismissed the appeal.

Cause Title: M/s. Jal Mahal Resorts Pvt. Ltd. v. Principal Commissioner, CGST & Central Excise, Jaipur
Case No.: Service Tax Appeal No. 52404 of 2018