Space Santa appears in the Season 8 episode Christmas in Space after the group tell eachother Christmas stories.
Nearing the end of the episode, Benson told his story about the Krampus which ended with the group chanting about 'handbells'. Mordecai and Rigby exclaim how his story was cool but "nobody likes handbells".
All of a sudden Space Santa bursts through the door, "Did I hear somebody say handbells" he says before telling them that he had been travelling billions of light years just to find someone with as much Christmas spirit as he has. "And that someone is you Benson" he says before Benson takes his glove off revealing a handbell. All of the crew begin waving handbells around exclaiming Merry Christmas.
He is a large, pink, slug-like alien creature witha long tentacle looking beard. He has three eyes and wears a Santa Claus outfit. Also he has handbells as hands.