In the case of Rishi Shipping – Gujarat Authority
for Advance Ruling has cleared the air that Storing/warehousing and renting of
immovable property are two different type of services. Merely because the
agricultural produce is stored in an immovable property it would not classify
it as Storage and Warehousing Services. Therefore the same shall not be covered
under S. No. 54 of Negative List (Notification No. 12/2017- Central Tax (Rate)
dated 28.06.2017), hence taxable under the purview of CGST and IGST Act.
The Authority held that in order to classify
a service as Storage and Warehousing, it should be coupled with
loading/unloading/packing services etc. The authority was of the view that
where mere building is let out, it shall be classified as renting of immovable
property which is chargeable to tax. It is the composite supply, principal
supply being renting of immovable property for storage of agricultural produce
which is exempt from tax. It further held that once the building is let-out,
the landlord does not have any control as to how it is being used by the tenant.
Authority was of the view that it is merely trading of the storage space and
not warehousing service.
In order to classify a service as warehousing
service, the owner should make arrangements for space to keep the goods,
loading, unloading and stacking of goods in the storage area, keeps inventory
of goods, makes security arrangements and provide insurance cover etc.The authority cleared the air and held that
what is exempt from GST is the composite supply of warehousing. Mere renting of
property will not classify under storage and warehousing. This will have large
scale implications on the godowns being taken on rent by various agriculture
committees/boards such as HAFED, MARKFED, FCI etc.
But to some relief the landlord who let out
their vacant land or elevated portion of land (plinth) for the purpose of
storage or any other activity incidental to the agricultural produce shall
remain exempt from GST as per Sr. No. 54(d) of the Negative List. Even in the
earlier service tax law, the CBEC education guide had cleared that vacant land let
out for agricultural produce shall not be charged to tax. Where the level is
elevated to protect the produce from water and other elements, it will still be
classified as letting out of vacant land for agricultural produce. Such plinth
or elevated structure is covered under the term “with or without structure on
vacant land” and hence exempt from tax.
Thanks and Regards
Keshav R Garg
(B.Com, FCA, CS, ISA(ICAI))
Author: Bharat's
GST Ready Reckoner
A Handbook on GST
Member: Indirect
Tax Committee of CII,
Founder:
MyGst.MyTax Foundation
Adviser: Industries
Association of Chandigarh
Adviser: Chambers
of Chandigarh Industries
Address: 3328, First
Floor, Sector 27 D, Chandigarh, India - 160 019
Phones:
+91-172-461-3328, +91-98880-90008
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