service tax on cold storages

[prasadu naladala]

If a private limited company owns a cold storage enguaged in agricultural products.Is service tax applicable or exempted?

[Mahir S]

Service tax is exempted in following case :-

Processes such as cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market.

Refer sub clause (iii) and (v) of section 66D(d) regarding services relating to agriculture - scope of negative service.

4.4.8 Would the processes of grinding, sterilizing, extraction packaging in retail packs of agricultural products, which make the agricultural products marketable in retail market, be covered in the negative list?

No. Only such processes are covered in the negative list which makes agricultural produce marketable in the primary market.

....

Hence, applicability/exemption of Service Tax to be decided based on the purpose for which such services are utilized in relation to agricultural products.

AI Summary

Service tax exemption for cold storage hinges on whether services preserve agricultural produce or alter it for retail marketability. Service tax on cold storage services depends on whether the activity preserves or merely readies agricultural produce for the primary market (exempt) or effects processing that makes the produce marketable in the retail market (taxable); the key inquiry is whether the service alters the essential characteristics of the agricultural produce.