Storage charges for frozen green peas in cold storage not exempt from GST as processing changes agricultural character

AAR Uttarakhand ruled that storage charges for frozen green peas in cold storage are not exempt from GST under the nil rate notification for storage of cereals, pulses, fruits and vegetables. The authority held that processing raw green peas into frozen green peas changes their basic essence and character, making them no longer qualify as agricultural produce or vegetables. The exemption applies only to storage of green peas in their original agricultural form, not processed frozen green peas. Therefore, applicable GST must be paid on storage services.

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Issues involved:
The application for advance ruling under u/s 97 of the CGST/SGST Act regarding the determination of the liability to pay tax on services.

Summary of Judgment:

Issue 1: Classification of services for tax liability
The applicant sought a ruling on whether storage charges for frozen green peas are taxable under the GST Act. The Authority examined the definition of agricultural produce and concluded that processed frozen green peas do not fall under the exemption for storage of green peas as defined in the relevant notification. Therefore, the storage charges are held to be taxable under the GST Act.

Issue 2: Applicability of NIL GST Tariff
The applicant inquired whether the storage charges fall under the NIL GST Tariff for services related to storage of cereals, pulses, fruits, and vegetables. The Authority referred to Notification No. 12/2017-Central Tax (Rate) and determined that services by way of storage of processed frozen green peas are not covered under the exemption provided for storage of vegetables. Hence, the storage charges are taxable under the GST Act.

Issue 3: Applicability of Notification
The applicant questioned the applicability of Notification No. 04/2022-Central Tax (Rate) to their case. The Authority ruled that the notification does not exempt the services of storage of processed frozen green peas, and therefore, the applicable GST must be paid by the applicant.

In conclusion, the Authority ruled that the storage charges for frozen green peas are taxable under the GST Act, do not fall under the NIL GST Tariff, and Notification No. 04/2022-Central Tax (Rate) is not applicable to the applicant's case.

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