The Telangana Authority of Advance Ruling (AAR) ruled that the 18% GST payable on cotton stored by Cotton Corporation of India (CCI) in the warehouses.
The applicant, M/s. Kakkirala Ramesh is providing storage services to different customers and also to the Cotton Corporation of India which consists of storage of ‘Fully Pressed Cotton Bales’. They have submitted that Cotton Corporation of India is objecting to levy of GST on storage service by relying on Circular No.16/16/2017-GST issued by the Central Warehousing Corporation.
The applicant has sought the advance ruling on the issue whether the Godown Rent collected from the CCI is exempted as per the Notification 21/2019 – Central Tax (Rate) Dated 30.09.2019 based on the Circular No.16/16/2017-GST.
The coram of Additional Commissioner (Central Tax), B. Raghu Kiran, and Additional Commissioner (State Tax), S.V. Kasi Visweswar Rao noted that the CCI has purchased raw cotton from farmers in the primary market and then processed it in ginning mills on a job work basis. CCI has paid tax on ginning and pressing to the ginning mills as it cannot claim exemption under Entry 24 of the modified Notification No. 11/2017. This processing is not meant for the primary market and hence It cannot be treated as raw cotton. Therefore it cannot be claimed that the cotton stored by CCI in the warehouses of the applicant falls under Entry 24B of Notification 21/2019 – Central Tax (Rate) Dated 30.09.2019.
“The warehousing services rendered by the applicant to CCI do not fall under Entry 24B Notification 21/2019 – Central Tax (Rate) Dated 30.09.2019 and hence are taxable at the rate of 9% under CGST and SGST each,” the AAR said.
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