Warehousing services for cotton bales not exempt under Notification 21/2019. Taxable at 9% under CGST and SGST.

The ruling determined that the warehousing services provided by M/s. Kakkirala Ramesh to Cotton Corporation of India for storing fully pressed cotton bales are not exempt under Notification 21/2019. The services are taxable at a rate of 9% under both CGST and SGST as they do not fall within the exemption for storage of raw agricultural produce to make them marketable. The application seeking GST exemption was dismissed, clarifying the tax treatment applicable to the services rendered.

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Issues:
1. Interpretation of exemption under Notification 21/2019 - Central Tax (Rate) Dated 30.09.2019 for godown rent collected from Cotton Corporation of India based on Circular No.16/16/2017-GST.

Analysis:
The applicant, M/s. Kakkirala Ramesh, sought an advance ruling regarding the exemption of GST on storage services provided to Cotton Corporation of India for 'Fully Pressed Cotton Bales.' The applicant argued that the Circular No.16/16/2017-GST supports their claim as they are storing commercially processed products, not raw agricultural produce. The key issue was whether the exemption under Notification 21/2019 applies to the storage of fully pressed cotton bales.

During the personal hearing, the applicant's representatives reiterated that they lease godowns to CCI for storing processed cotton bales and questioned if these qualify for exemption under the GST Act based on specific notifications. The discussion focused on the interpretation of the relevant notifications and circulars to determine the applicability of the exemption to the services provided by the applicant.

The Authority for Advance Ruling analyzed the notifications and found that the exemption under Entry 24B of Notification 21/2019 dated 30.09.2019 pertains to storage services of raw agricultural produce, such as cotton, jute, etc., for making them marketable for the primary market. The processing of raw cotton into bales through ginning and pressing activities does not fall under this exemption. As Cotton Corporation of India processes raw cotton obtained from farmers and pays GST on ginning charges, the storage services provided by the applicant are not covered under the exemption.

Consequently, the ruling issued stated that the warehousing services rendered by the applicant to Cotton Corporation of India do not qualify for exemption under Notification 21/2019 and are taxable at the rate of 9% under both CGST and SGST. The application filed by M/s. Kakkirala Ramesh was disposed of accordingly, providing clarity on the tax treatment of the services in question.

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