2021 (10) TMI 520 - AAR - GST

Exemption from GST - Godown Rent collected from the CCI - N/N. 21/2019 Central Tax (Rate) Dated 30.09.2019 based on the Circular No.16/16/2017-GST - HELD THAT - The CCI has purchased raw cotton from farmers in the primary market and then processed it in ginning mills on 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 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 fall under Entry 24B of Notification No. 21/2019 dated 30.09.2019. The warehousing services rendered by the applicant to CCI do not fall under Entry 24B Notification No. 21/2019 dated 30.09.2019 and hence are taxable at the rate of 9% under CGST and SGST each. Application disposed off.

Summary

Issues:
1. Interpretation of exemption under Notification 21/2019 - Central Tax (Rate) Dated 30.09.2019 for godown rent collected from Cotton Corporation of India based on Circular No.16/16/2017-GST.

Analysis:
The applicant, M/s. Kakkirala Ramesh, sought an advance ruling regarding the exemption of GST on storage services provided to Cotton Corporation of India for 'Fully Pressed Cotton Bales.' The applicant argued that the Circular No.16/16/2017-GST supports their claim as they are storing commercially processed products, not raw agricultural produce. The key issue was whether the exemption under Notification 21/2019 applies to the storage of fully pressed cotton bales.

During the personal hearing, the applicant's representatives reiterated that they lease godowns to CCI for storing processed cotton bales and questioned if these qualify for exemption under the GST Act based on specific notifications. The discussion focused on the interpretation of the relevant notifications and circulars to determine the applicability of the exemption to the services provided by the applicant.

The Authority for Advance Ruling analyzed the notifications and found that the exemption under Entry 24B of Notification 21/2019 dated 30.09.2019 pertains to storage services of raw agricultural produce, such as cotton, jute, etc., for making them marketable for the primary market. The processing of raw cotton into bales through ginning and pressing activities does not fall under this exemption. As Cotton Corporation of India processes raw cotton obtained from farmers and pays GST on ginning charges, the storage services provided by the applicant are not covered under the exemption.

Consequently, the ruling issued stated that the warehousing services rendered by the applicant to Cotton Corporation of India do not qualify for exemption under Notification 21/2019 and are taxable at the rate of 9% under both CGST and SGST. The application filed by M/s. Kakkirala Ramesh was disposed of accordingly, providing clarity on the tax treatment of the services in question.