2019 (8) TMI 1802 - AAAR - GST

Appellate Authority Upholds Tax on Lien/Mortgage Charges

In Re: M/s. Haryana State Warehousing Corporation

The appeal was dismissed by the appellate authority, upholding the Advance Ruling that determined lien or mortgage charges and stock transfer fees ... Taxability - lien or mortgage charges and stock transfer fees received by the applicant from the service receiver - taxable under Section 9 of Central Goods and Services Tax Act, 2017 and Section 9 of Haryana Goods and Services Tax Act, 2017 or exempt under Section 11 of Central Goods and Services Tax Act, 2017 and Section 11 of Haryana Goods and Services Tax Act, 2017 with respect to both agricultural and non-agricultural produce stored and, warehoused in the warehouses of the applicant - HELD THAT:- Sub-section 4 (1) of the Warehousing (Development and Regulation) Act, 2007 provides that any person desirous of commencing or carrying on the business of maintaining a warehouse issuing negotiable warehouse receipts may make an application to the Authority for registration in respect of one or more warehouses owned or occupied by him. Further, section 2 (m) of the said act provides that “negotiable warehouse receipt” means a warehouse receipt under which the goods represented therein are deliverable to the depositor or order, the endorsement of which has the effect of transfer of goods represented thereby and the endorsee for which takes a good title. As per second proviso to section 3 of the said Act, no such registration shall be required for warehouses which do not propose to issue negotiable warehouse receipt. Therefore, even if a warehouse operator is not issuing any negotiable warehouse receipts and is not registered under the Warehousing (Development and Regulation) Act, 2007, the other services provided by him (i.e. other than lien or mortgage charges and stock transfer fees) shall qualify as warehousing services. Therefore, for any service to qualify as warehousing services it is not imperative that negotiable warehousing receipts must have been issued for them. Therefore, scope of storage or warehousing services cannot be expanded to unlimited extent. Only the services similar to the services mentioned in the entry can be construed as included therein. Thus, it is clear that the lien or mortgage charges and stock transfer fees received by the applicant from the service receiver are taxable under Section 9 of Central Goods and Services Tax Act, 2017 and Section 9 of Haryana Goods and Services Tax Act, 2017 and do not fall in exemption category as provided in entry no, 54 of the Notification dated 30th June, 2017 of the Haryana Government Excise and Taxation Department - the Advance Ruling does not suffer from any infirmity or illegality and the same is upheld. Issues:1. Whether lien or mortgage charges and stock transfer fees received by the appellant are taxable under the Central Goods and Services Tax Act, 2017 and the Haryana Goods and Services Tax Act, 2017 or exempt under specific sections.Analysis:The appeal was filed against an Advance Ruling that held lien or mortgage charges and stock transfer fees received by the appellant as taxable under the CGST Act, 2017/HGST Act, 2017. The appellant, a warehousing corporation, argued that the ruling was against the law and failed to differentiate between storage and warehousing services. The appellant contended that the circular defining warehousing services was extensive, covering various aspects beyond those explicitly mentioned. The appellant also cited specific notifications exempting certain services related to agricultural produce. The appellant emphasized that the charges in question fell under the exempt category. The appellate authority thoroughly reviewed the arguments presented, including references to relevant legal provisions and definitions.The appellate authority examined the Warehousing Development and Regulation Act, specifically defining warehousing business and warehouse receipts. The authority analyzed the relevant notifications exempting specific services related to agricultural produce. The authority rejected the appellant's argument that all services provided by a warehouse owner qualified as warehousing services, emphasizing the specific scope outlined in the notifications. The authority also highlighted the requirement for registration under the Warehousing (Development and Regulation) Act for issuing negotiable warehouse receipts. The authority clarified that services beyond lien or mortgage charges and stock transfer fees could qualify as warehousing services even without issuing negotiable warehouse receipts. The authority concluded that the charges in question were taxable under the CGST Act, 2017 and HGST Act, 2017, not falling under the exemption category specified in the relevant notification.In the final decision, the appeal was dismissed, upholding the Advance Ruling's findings. The appellate authority found no infirmity or illegality in the ruling, affirming that the charges were indeed taxable under the applicable tax acts. The detailed analysis considered the definitions, legal provisions, and notifications cited by the appellant, ultimately leading to the dismissal of the appeal.