Warehouse fumigation services ruled taxable under GST; correct classification and 18% rate confirmed

The fumigation services provided in a warehouse of agricultural produce were ruled as taxable and not exempt under Entry No. 54 of Notification No. 12/2017-CT (Rate). The correct classification of fumigation services under Service Accounting Code 99853 was confirmed, and the applicable GST rate for such services was determined to be 18% (CGST 9% + SGST 9%).

---

---

Issues Involved:
1. Taxability of fumigation services provided in a warehouse of agricultural produce.
2. Classification of fumigation services under Service Accounting Code 998531.
3. Determination of tax liability on such services.

Issue-wise Detailed Analysis:

1. Taxability of Fumigation Services in a Warehouse of Agricultural Produce:
The applicant, M/s. Shri Sai Pest Control, sought clarification on whether fumigation services provided in a warehouse of agricultural produce are exempt under Entry No. 54 of Notification No. 12/2017-CT (Rate) dated 28.06.2017. The applicant argued that such services should be exempt, as they are related to agricultural produce stored for import or export purposes.

The Authority for Advance Ruling examined the nature of the fumigation services provided, which involves using gaseous pesticides to control pests in grain and produce, including during the processing of goods for import or export. The key consideration was whether these services fall under the exemption provided for "fumigation in a warehouse of agricultural produce."

The relevant entry (54) of Notification No. 12/2017-CT (Rate) exempts services related to the cultivation of plants and rearing of animals for food, fiber, fuel, raw material, or other similar products, specifically mentioning fumigation in a warehouse of agricultural produce. However, the definition of "agricultural produce" under Explanation 2(d) of the Notification specifies that it must be produce from cultivation or rearing that has not undergone significant processing beyond what is usually done by a cultivator to make it marketable in the primary market.

The Authority concluded that fumigation services provided in a bonded/customs warehouse for exported or imported agricultural produce do not fall under the exemption. This is because such produce has typically undergone further processing to make it suitable for export, thus moving beyond the primary market and not fitting the definition of "agricultural produce" as per the Notification.

2. Classification of Fumigation Services under Service Accounting Code 998531:
The applicant sought confirmation on the correct classification of fumigation services under Service Accounting Code (SAC) 998531. The Authority referred to the explanatory notes of SAC, which include "disinfecting and exterminating services," covering fumigation services and pest control services.

The relevant entry in the explanatory notes for SAC 99853 includes:
- Disinfecting dwellings and other buildings.
- Disinfecting vehicles (buses, trains, boats, planes).
- Exterminating insects, rodents, and other pests.
- Fumigation services and pest control services.

Based on this, the Authority confirmed that the classification of fumigation services under SAC 99853 is correct.

3. Determination of Tax Liability on Fumigation Services:
To determine the GST rate applicable to fumigation services, the Authority referred to Notification No. 11/2017-CT (Rate) dated 28.06.2017. The relevant entry (23) under Heading 9985 specifies the GST rate for support services, including cleaning services.

The applicable GST rate for fumigation/pest control services under SAC 99853 is 18% (comprising 9% CGST and 9% SGST).

Ruling:
1. Taxability: Fumigation services provided in a warehouse of agricultural produce are taxable and not exempt under Entry No. 54 of Notification No. 12/2017-CT (Rate) dated 28.06.2017.
2. Classification: The classification of fumigation services under Service Accounting Code 99853 is correct.
3. Tax Liability: The GST rate for fumigation/pest control services in a warehouse of agricultural produce is 18% (CGST 9% + SGST 9%).

---