SERVICE TAX ON COLD STORAGE F Y 16.17 AND 17.18

[NILESH PITALE]

Dear Sir

We are in the business of cold storage warehouse and we store food items (Agricultural & Non-Agricultural). During 2016-17 & 2017-18 storage of agricultural food items included

Fruits and Vegetables Pulses (Rajma, Green peas, Chawali, etc) Wet Dates and Dried Dates Groundnuts (Singdana) Inshell Walnut

Whereas from the above items Service tax officer accepted only fruits and vegetables as agricultural and rest all treated as non-exempted/ non-agricultural, and have raised a demand for the same. Are They Correct

Please Guide

AI Summary

Agricultural produce classification affects service tax liability for stored food items when processing alters essential characteristics.
Service tax treatment depends on whether goods are agricultural produce, defined as cultivation outputs for food, fibre, fuel, raw material or similar uses on which either no further processing is done or only processing usually performed by a cultivator that does not alter essential characteristics and only makes the produce marketable for the primary market. A five-fold test assesses origin, intended use, absence of further processing, comparability to cultivator processing, and preservation of essential characteristics; goods processed beyond cultivator-level, including seed-quality or commercially processed grains, may lose exempt status and be taxable.