2019 (2) TMI 1903 - AAR - GST

Taxability - lien or mortgage charges and stock transfer fees received by the applicant from the service receiver - taxable under section 9 of Central Goods and Service Tax Act, 2017 and Section 9 of Haryana Goods and Service Tax Act, 2017 or exempt under section 11 of Central Goods and Service Tax Act, 2017 with respect to both agricultural and non-agricultural produce stored and warehoused in the warehouses of the applicant? - HELD THAT - On perusal of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, the Advance Ruling Authority reaches to the conclusion that the services in question are taxable services. The Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 provides for Nil rate of tax with respect to loading, unloading, packing, storage or warehousing of agricultural produce. The notification nowhere exempts the charge/mortgage/lien fee and stock transfer fee charged by the applicant from the service recipient in case of agricultural goods from the Goods and Services Tax. The scope of storage and warehousing services as defined in CBEC Circular No. B/II/1/2002-TRU dated 01.08.2002 does not encompass the mortgaging and stock transfer service - The charge/mortgage/lien fee and stock transfer fee with respect to non-agricultural goods stored and warehoused is liable to tax under the CGST/ HGST Act, 2017.

Summary

Issues:
Taxability of lien or mortgage charges and stock transfer fees received by the applicant under Central Goods and Service Tax Act, 2017 and Haryana Goods and Service Tax Act, 2017.

Analysis:
The applicant, incorporated under the Warehousing Corporation Act, 1962, provides storage services for agricultural and non-agricultural produce. The goods stored in their warehouses serve as security for owners seeking loans. The applicant charges fees for creating a charge/mortgage/lien on warehoused goods and for stock transfer in case of ownership change.

Discussion:
The applicant sought an Advance Ruling on whether lien or mortgage charges and stock transfer fees are taxable under section 9 of CGST Act, 2017 and HGST Act, 2017, or exempt under section 11 of CGST Act, 2017 for both agricultural and non-agricultural produce stored in their warehouses. They argued for exemption based on relevant notifications and circulars.

The applicant relied on Notification No. 12/2017-Central Tax (Rate) and a similar Haryana notification, stating that loading, unloading, packing, storage, or warehousing of agricultural produce attracts Nil tax rate under section 11 of CGST Act, 2017. They contended that mortgaging and stock transfer services are part of storage and warehousing services and should thus be tax-exempt.

Finding:
After extensive deliberation and review of the notifications and circulars, the Advance Ruling Authority concluded that the services in question are taxable. The notifications only exempt loading, unloading, packing, storage, or warehousing of agricultural produce from tax, not the charges for lien, mortgage, or stock transfer. The scope of storage and warehousing services, as defined in a relevant circular, does not cover mortgage and stock transfer services.

Therefore, the charge/mortgage/lien fees and stock transfer fees for non-agricultural goods stored in the applicant's warehouses are subject to tax under CGST/HGST Act, 2017. The ruling was made accordingly and is to be communicated to the parties involved.