Wheat Storage Charges - GST applicability

[Balakrishnan Ramalingam]

My clients rent out their godown for storage of wheat. Please advice GST should be charged or not?

[Spudarjunan S]

Dear Sir,

Try out the exemption under sl.no 54 of notification no.12/2017 C.T(R) dated 28th June 2016. However if you provide any other taxable supplies and your total T.O(including exempted supplies) during the F.Y exceeds ₹ 20 lakhs you are mandatorily liable for registration under GST and pay GST only on taxable supplies (you can still avail the exemption u/n 12/2017 C.T(R) for warehousing of wheat)

[KASTURI SETHI]

Dear Querist,

Pl. go through this decision of AAR before arriving at any decision.

IN RE: M/S. AWLA INFRA  [ 2019 (2) TMI 1002 - AUTHORITY FOR ADVANCE RULING, HARYANA ]

[SHARAD ANADA]

There is a very fine difference between renting and warehousing. The difference between renting and warehousing has been explained by CBEC in F. No. B-11/1/2002-TRU, dated 1-8-2002, wherein it has been clarified that

Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, by agencies such as the Central Ware Housing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage godown and tankers operated by private individuals etc. The storage and warehousing service provider normally make arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc.

It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area.

[KASTURI SETHI]

IN RE : M/S. RISHI SHIPPING [ 2018 (6) TMI 1195 - AUTHORITY FOR ADVANCE RULING - GUJARAT ]

[KASTURI SETHI]

Dear Sh.Sharad Anada Ji,

You are absolutely right there is a difference between both services i.e. Renting and storage and warehousing.

IN RE: SHUBHLAXMI COLD STORAGE & ICE FACTORY PRIVATE LIMITED [ 2018 (10) TMI 1141 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN ]

[Balakrishnan Ramalingam]

Thanks for every reply and every one.

I still not got it cleared. Let me explain my query or situation further:

1. My clients are flour millers.

2. They purchase wheat from traders and store in their godowns.

3. They also undertake job work for grinding of wheat and receive wheat for conversion in huge quantities. Once the stocks are unloaded in our godowns, they get merged with our stock since practically all wheat are same subject to varieties. Then Stock keeping, security arrangements, and fumigations are at done at our cost. The job work principals are charged based on the stock in hand of wheat for each month at a particular rate.

4. This is purely an industrial service.

5. Notification S.No 54 of 12/2017 starts like this :

Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of- (a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply of farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of agricultural produce;

6. All services beneth the para 54 denotes only services to agriculturist like harvest, test, supply of farm labour, pruning cutting etc., renting of agro machineries and storage or warehousing of agri produce .........

7. So when the whole exemption is towards service to agriculturist, an industrialist doing service to another industrialist, can pierce the notification and directly go clause (e) and claim that storing of agri produce is exempt by completely ignoring the very purpose as stated in the opening para of notification S.No. 54 of 12/2017?

Pl discuss and arrive at conclusion

Thanks and regards,

R.Balakrishnan FCA

[KASTURI SETHI]

I am of the view that your client is not entitled to exmption at all. However, in view of conflicting decisions, you may opt for Advance Ruling.

AI Summary

GST exemption for storage of agricultural produce may not apply where services amount to industrial job work or mere renting. GST applicability hinges on whether the activity is mere renting of space or a storage/warehousing service for agricultural produce covered by the exemption notification. Mere rental without services is not exempt; provision of services such as loading, stacking, security, inventory control and fumigation aligns with warehousing and may be exempt when rendered to agriculturists, but industrial job work and merging of consigned stock suggest a taxable industrial service. Registration is required when aggregate turnover exceeds the statutory threshold, and conflicting AARs warrant seeking an advance ruling on mixed facts.