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of <h1>Ruling: Leasing immovable property & agricultural support services = 'Mixed Supply' under CGST/HGST Act, 2017.</h1> <h3>In Re: M/s. Awla Infra</h3> In Re: M/s. Awla Infra - 2019 (22) G.S.T.L. 149 (A. A. R. - GST) Issues Involved:1. Applicability of GST on leasing of godowns under the PEG-2008 scheme.2. Classification of services provided under the PEG-2008 scheme.3. Nature of services provided (whether mixed supply).4. Tax rate applicable to the services provided.Issue-wise Detailed Analysis:1. Applicability of GST on leasing of godowns under the PEG-2008 scheme:The applicant sought an advance ruling on whether GST is exempt or applicable on the Private Entrepreneurs Godowns built under the PEG-2008 scheme of the FCI and leased out to the Nodal Agency (UPSWC) on 'Lease and services basis' for the storage of FCI's food grain stocks (Wheat). The Deputy Excise & Taxation Commissioner, Sirsa, clarified that renting/leasing of immovable property is a supply of services under section 7 of the HGST Act, 2017, and thus taxable. The applicant argued that under the Service Tax regime, they were reimbursed for service tax by FCI/HAFED, and they believe the nature of taxation remains unchanged under the GST regime.2. Classification of services provided under the PEG-2008 scheme:The services provided by the applicant fall under two categories: 'Lease only basis' and 'Lease and Services basis.' The present case falls under the 'Lease and Services basis,' where the private investor manages storage, preservation, and warehousing of the stocks under the supervision of the Nodal Agency. The applicant referred to a letter from FCI clarifying that agreements under 'Lease with Services Basis' are considered 'Storage and Warehousing Services,' which are exempt from GST.3. Nature of services provided (whether mixed supply):The authority examined whether the services provided by the applicant constitute a 'Mixed Supply' under section 2 (74) of the CGST/HGST Act, 2017. The applicant provides both support services in relation to agricultural produce and Real Estate Services (leasing of immovable property). Since these services can be provided independently and are not naturally bundled, they are treated as 'Mixed Supply,' attracting the highest rate of tax applicable to any one of the supplies.4. Tax rate applicable to the services provided:The relevant notifications and service codes were analyzed to determine the applicable tax rate. The service code 997212 for renting or leasing services involving non-residential property attracts 18% GST. Since the applicant's services are classified as 'Mixed Supply,' they attract the highest applicable tax rate, which is 18% (9% CGST + 9% HGST).Ruling:The authority ruled that the services provided by the applicant, i.e., leasing of immovable property and support services in relation to agricultural produce, are in the nature of 'Mixed Supply' as per section 2 (74) of the CGST/HGST Act, 2017. Consequently, these services attract a tax rate of 18% (9% CGST + 9% HGST) as applicable to SAC 997212. The ruling was ordered to be communicated accordingly.
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