1.Kashmir is known as the heaven on Earth.
2.Kashmir is known as heaven on Earth.
3.Kashmir is known as the heaven on the Earth.
Which out the above sentences is/are correct?
I would capitalise "Earth" because it's a proper noun - the actual name of a physical planet. I would not capitalise "heaven" - it's an idea, a concept (one which only exists in some cultures and religions), not a physical place which would attract the capitalisation that goes with a proper noun.
As Rover said, in this context, the article is not required because "heaven on Earth" is a set phrase.
Remember - if you don't use correct capitalisation, punctuation and spacing, anything you write will be incorrect.