Storage and warehousing exemption applies where godown services include maintenance, security, insurance, and record-keeping for agricultural produce.

Services provided for godown facilities to the Food Corporation of India were not treated as passive renting of immovable property because the arrangement required the provider to keep the premises storage-worthy, maintain records, insure stocks, and supply security and related facilities. On those terms, the activity was characterised as storage and warehousing rather than mere leasing. As the goods stored were agricultural produce, the service fell within the exempt storage and warehousing category, and service tax under renting of immovable property was held unsustainable.

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Issues: Whether the services provided by the appellant to the Food Corporation of India were taxable as renting of immovable property or fell under storage and warehousing services exempt in respect of agricultural produce.

Analysis: The agreement and connected documents showed that the appellant did not merely lease godown space on a passive rental basis. The appellant was obliged to keep the godowns storage-worthy, maintain records, insure the stocks, and provide associated services such as security and other facilities. The activity was therefore not confined to renting of immovable property. Since the goods involved were agricultural produce, the service fell within the exempt storage and warehousing category.

Conclusion: The demand of service tax under renting of immovable property service was unsustainable, and the appellant was not liable to pay service tax on the activity.

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