Taxability of Lien, Mortgage Charges & Stock Transfer Fees under GST Acts

The Advance Ruling Authority determined that lien or mortgage charges and stock transfer fees received by the applicant for non-agricultural goods stored in their warehouses are taxable under the Central Goods and Service Tax Act, 2017 and Haryana Goods and Service Tax Act, 2017. The Authority found that the exemptions under relevant notifications apply only to specific services related to agricultural produce, not to charges for lien, mortgage, or stock transfers. Therefore, the fees in question are subject to taxation under the respective Acts.

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Issues:
Taxability of lien or mortgage charges and stock transfer fees received by the applicant under Central Goods and Service Tax Act, 2017 and Haryana Goods and Service Tax Act, 2017.

Analysis:
The applicant, incorporated under the Warehousing Corporation Act, 1962, provides storage services for agricultural and non-agricultural produce. The goods stored in their warehouses serve as security for owners seeking loans. The applicant charges fees for creating a charge/mortgage/lien on warehoused goods and for stock transfer in case of ownership change.

Discussion:
The applicant sought an Advance Ruling on whether lien or mortgage charges and stock transfer fees are taxable under section 9 of CGST Act, 2017 and HGST Act, 2017, or exempt under section 11 of CGST Act, 2017 for both agricultural and non-agricultural produce stored in their warehouses. They argued for exemption based on relevant notifications and circulars.

The applicant relied on Notification No. 12/2017-Central Tax (Rate) and a similar Haryana notification, stating that loading, unloading, packing, storage, or warehousing of agricultural produce attracts Nil tax rate under section 11 of CGST Act, 2017. They contended that mortgaging and stock transfer services are part of storage and warehousing services and should thus be tax-exempt.

Finding:
After extensive deliberation and review of the notifications and circulars, the Advance Ruling Authority concluded that the services in question are taxable. The notifications only exempt loading, unloading, packing, storage, or warehousing of agricultural produce from tax, not the charges for lien, mortgage, or stock transfer. The scope of storage and warehousing services, as defined in a relevant circular, does not cover mortgage and stock transfer services.

Therefore, the charge/mortgage/lien fees and stock transfer fees for non-agricultural goods stored in the applicant's warehouses are subject to tax under CGST/HGST Act, 2017. The ruling was made accordingly and is to be communicated to the parties involved.

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