2020 (8) TMI 528 - AAAR - GST

Nature of supply of services - Difference between the Storage or warehousing services and providing warehouse on rent - Is GST liable to be paid on the entire amount paid as consideration for storage charges or is GST liable to be paid only on the storage of taxable food commodities like palm oil, etc? - exemption from GST in terms of entry SI. Nos 54 or 24 of Rate Notification No 12/2017 CT (R) dated 28-06-2017 - challenge to AAR decision. HELD THAT - CWC is only providing the 488 sqmetres of space in the central warehouse for rent. The space has been taken on rent by the Appellant for storing the food grains. The activity which is under consideration here is the activity performed by CWC and not the activity undertaken by the Appellant. The supply made by CWC is merely a renting of space. There is difference between storage or warehousing service and renting of storage premises service. The storage and warehousing service provider normally makes arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provides insurance cover etc. In a case where a person only rents the storage premises, he does not provide any service such as loading / unloading, stacking, security etc. Mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. The Appellant has referred to a clarification given by the Commissioner Service Tax to the effect that the storage of food grains would not attract service tax - Since we are considering the nature of the service supplied by CWC, the clarification given by the Commissioner Service Tax to the Appellant has no relevance. The service supplied by CWC to the Appellant is renting of immovable property. The amount of rent paid by the Appellant to CWC is taxable at the hands of CWC under the category Rental or leasing services involving own or leased non-residential property (Service Accounting Code - 997212) - decision of AAR upheld.

Summary

Issues Involved:
1. Applicability of GST on storage charges for storage space provided by Central Warehousing Corporation.
2. Interpretation of service provided by Central Warehousing Corporation - renting of commercial space or storage service of goods.
3. Condonation of delay in filing the appeal.
4. Exemption under Notification No 12/2017 CT (R) dated 28-06-2017 for services related to storage of agricultural produce.

Analysis:

Issue 1: Applicability of GST on storage charges for storage space provided by Central Warehousing Corporation

The Appellant, a government undertaking, entered into an agreement with Central Warehousing Corporation (CWC) for storage space. The Appellant questioned whether GST is payable on storage charges for the entire amount or only on specific commodities. The Karnataka Authority for Advance Ruling held that the service provided by CWC falls under renting of commercial space and is subject to GST under specific entries of the CGST and SGST Acts.

Issue 2: Interpretation of service provided by Central Warehousing Corporation

The Appellant argued that the service provided by CWC should be exempt from GST based on specific notifications. They contended that the nature of their activity remained the same under both the Service Tax regime and GST regime. However, the Appellate Authority determined that the service provided by CWC was renting of immovable property based on the terms of the agreement between the parties.

Issue 3: Condonation of delay in filing the appeal

The Appellant sought condonation of a 19-day delay in filing the appeal, attributing it to management considerations. The Authority, under the proviso to Section 100(2) of the CGST Act, condoned the delay and proceeded to examine the appeal on its merits.

Issue 4: Exemption under Notification No 12/2017 CT (R) dated 28-06-2017 for services related to storage of agricultural produce

The Appellant referenced specific notifications to support their claim for exemption from GST on services related to storage of agricultural produce. However, the Authority concluded that the service provided by CWC was renting of immovable property and not storage or warehousing of goods, thereby dismissing the appeal.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the final decision rendered by the Appellate Authority for Advance Ruling, Karnataka.