2019 (10) TMI 799 - AAR - GST

Levy of GST - storage charges for the agreed space for storage - N/N. 12/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT - The services provided by the Central Warehousing Corporation to the applicant is actually a renting of an immovable property and not storage service of goods. The said service is covered under SAC 997212 is liable to a CGST of 9% under entry no. 16 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. The service is also liable to a tax of 9% under the KGST Act, 2017 under entry no. 16 of Notification (11/2017) No. FD 48 CSL 2017 dated 28-06.2017.

Summary

Issues: Determination of GST liability on storage charges for a godown rented by a Government Company for storing both exempt and taxable commodities.

Analysis:
1. Application for Advance Ruling: The Government Company, seeking clarification on GST liability, filed an application under Section 97 of the CGST / KGST Act, 2017, regarding the payment of GST on storage charges for a godown rented from the Central Warehousing Corporation.

2. Nature of Business Activities: The applicant, engaged in distributing essential commodities under the Public Distribution System, rented a godown for storing items like Rice, wheat, Palm Oil, Toor dal, and salt. The applicant questioned whether GST is applicable on the total storage charges or only on taxable goods stored.

3. Facts Presented: The applicant highlighted that the Central Warehousing Corporation charged GST based on the warehousing agreement. Reference was made to specific notifications exempting services related to storage of rice and agricultural produce from GST.

4. Personal Hearing Proceedings: A representative of the applicant appeared for personal hearing proceedings and reiterated the facts presented in the application.

5. Findings & Discussion: The Authority considered the submissions and facts presented, noting that the provisions of the CGST and KGST Acts are similar. Upon examining the agreement with the Central Warehousing Corporation, it was established that the service provided was renting of an immovable property, not storage of goods. The service was classified under SAC 997212 and subject to 9% CGST and KGST as per relevant notifications.

6. Ruling: The Authority ruled that the services provided by the Central Warehousing Corporation constituted renting of commercial space in an immovable property, attracting 9% CGST and KGST as per the applicable notifications.

This detailed analysis of the judgment clarifies the GST liability on storage charges for a godown rented by a Government Company, emphasizing the distinction between renting an immovable property and storage services for tax purposes.