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Renting of Warehouse for Agriculture Produce – Taxable under GST





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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