Servicetax on Cold Storage

[Haresh Raithatha]

One of My client Running a cold storage since 40 years. Please guide me in respect of chargeabality of Service tax on Cold storage activities for Agricutural as well as non Agri produce.

Whether Rice Cereals Jaggery Ginned Cotton copra etc are liable for charging of service tax .

Please give your valuable views.

[KASTURI SETHI]

As per definition of , "Storage and Warehousing Services" under Section 65(102) of the Finance Act,1994 any service provided by a cold storage out of purview of Service Tax.

Regarding 2nd query treating it meant for storage and warehousing services (excluding cold storage service),the storage rice, cereals,jaggery, copra are exempt from service tax but the storage of ginned cotton is not exempt. It is pertinent to mention that manufactured products are not covered under the definition of "Agriculture Produce".

[ashish chaudhary]

1. Storage and warehousing of agricultural produce covered by Negative List 66D (d) (v). All storage covered whether cold storage or otherwise. Non agricultural produce storage liable to service tax @ 14%.

2. Storage of rice and cotton covered by entry no. 40 of Mega Exemption Notification. Exempted.

3. Jaggery, cereals and copra could be considered agricultural produce if no processing undertaken to make them marketable other than for primary market.

4. If providing both taxable and exempted services, follow rule 6 of cenvat credit rules for reversal of credit attributable to exempted service.

[KASTURI SETHI]

I agree with Sh.Ashish Chaudhary with his reply mentioned at serial no.2,3,4. Regarding the reply at serial no.1, will Sh.Chaudhary elaborate how all storage whether cold storage or otherwise are covered under the definition ?

Thanks a lot.

[ashish chaudhary]

Sir, section 65 defining various service has been omitted from statute book w.e.f. 1.7.2012.

Negative list entry related to agricultural produce mention warehousing, which in the absence of any specific restriction, would cover warehousing of all natures.

[KASTURI SETHI]

Thanks a lot. Sh.Chaudhary Ji.

[Manoj Agarwal]

Fully Agree with views of Mr. Ashish Chaudhary.

AI Summary

Service tax on storage: agricultural produce storage exempt, non-agricultural storage taxable; credit reversal obligations apply.
Service tax on cold storage turns on whether stored goods are agricultural produce: storage and warehousing of agricultural produce fall under the negative list and are not taxable, including cold storage used solely for such produce; non agricultural storage and storage of manufactured products are taxable. Rice and cotton enjoy specific exemption treatment under the Mega Exemption framework; goods processed beyond primary market preparation (e.g., ginned cotton) are excluded from the agricultural exemption. Providers offering both taxable and exempt services must apply Cenvat Credit Rules, including credit reversal.