The Tamil Nadu Authority for Advance Ruling (TNAAR) ruled that renting warehouses to store agricultural produce is covered under the entry ‘Rental or leasing services involving own or leased non-residential property’ and attracts 18% Goods and Services Tax (GST).
The applicant, Samco Logistics LLP, a lessor to provide a warehouse to the lessee on rental basis to store agricultural produce, i.e., fruits & vegetables.
The Lessee Purchases these Fruits & Vegetables from Farmers and Traders directly and stores the same in the Warehouse of Lessor. Later, the Lessee packs these Fruits & Vegetables without any further processing as such for Sale.
The applicant claims exemption for the Services by way of renting the warehouse to keep Fruits & Vegetables that attract “NIL” rate of GST by relying on Entry No. 54(e) under the Notification No. 12/2077 C.T (Rate) dated 28.06.2017.
The bench observed the statement of the jurisdictional authority, relying on the statement of facts given by the applicant, further states that the applicant is not directly providing the service of renting a warehouse to farmers.
Further, the applicant as lessor has provided warehouse to the Lessee on rental basis, who is further providing warehouse to farmers for storage, packing and selling of agricultural produce, which means the applicant is involved in services relating to rental/lease business.
Accordingly, the jurisdictional authority opined that the applicant is providing renting of immovable property service in terms of clause (a) of para 5 of Schedule 11 to Central Goods Services Tax Act (CGST Act), 2017 and attract GST at 18% under SAC 9972 as per residuary entry at Sl. No. 16 of Notification No. 11/2017 CT (Rate) dated 28.06.2017.
The panel of N. Usha and R. Goplasamy observed that the rental income received by the applicant from Renting Warehouse to store agricultural produce is a consideration for supply and the activity is covered under the meaning of supply of services in terms of Section 7 of the CGST Act.
Further observed that renting a warehouse to store agricultural produce is considered as supply of service, and the same is not classifiable as “loading, unloading, packing, storage or warehousing of agricultural produce, with ‘Nil’ GST Rate under Sl. No. 54(e) of SAC 9985 of the Notification-11/2017- C.T. (Rate) dated 28th June 2017.
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