2018 (6) TMI 1195 - AAR - GST

Levy of GST - storage charges for storing the imported agri product in godowns at Gandhidham - Difference between storage or warehousing service and renting of storage premises service - Held that - The storage and warehousing service provider normally make 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 provide 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. From the nature of service provided by the applicant, as described in the application, it is clear that the applicant only rent the storage premises. Once the storage premises is rented by the applicant to its customers, what use the customer makes of such premises doesn t have any bearing on the nature of service provided by the applicant - the applicant is required to pay Goods and Services Tax at 18% (CGST 9% GGST 9% or IGST 18%) for aforesaid activity carried out by them classifiable as Rental or leasing services involving own or leased non-residential property (Service Accounting Code 997212). Ruling - The service provided by M/s. Rishi Shipping is classifiable as Rental or leasing services involving own or leased non-residential property (Service Accounting Code 9972) leviable to Goods and Services Tax @ 18%.

Summary

Issues:
Applicability of GST on invoices raised for storage charges for imported agricultural commodities in godowns.

Analysis:
1. The applicant, a Cargo Handling company, sought an advance ruling on the GST applicability for invoices raised to clients for storing imported agricultural products in godowns. The company operates at Kandla Port Trust and provides cargo handling services, including storage space rental to customers.

2. The Goods & Services Tax Commissionerate stated that the activity of providing storage space by the applicant falls under renting of immovable property and is taxable under GST. The Commissionerate clarified that even if considered as sub-letting, it would still be classified as renting of immovable property, subject to CGST and IGST.

3. The Commissionerate further explained that an exemption for exporters of agricultural produce is only available if a direct agreement is made with the warehouse owner for storage services exclusively for agricultural produce. However, no such exemption is available for imported agricultural commodities under the GST regime.

4. The Commissionerate emphasized that the applicant's activity of trading storage space is considered as renting of immovable property, attracting CGST and IGST. Input Tax Credit can be availed for tax paid by the warehouse owner, as per the provisions of the CGST and IGST Acts.

5. Upon reviewing sample invoices provided by the applicant, it was noted that the service description was listed as "Godown Rent" with GST paid at 18%. The applicant did not provide any interpretation to support the non-applicability of GST to their activities.

6. The ruling authority examined the nature of services provided by the applicant. It distinguished between storage or warehousing services and renting of storage premises, noting that the applicant only rented storage space without providing additional services like loading, unloading, or security.

7. Considering the nature of services described by the applicant, the ruling authority concluded that the activity falls under "Rental or leasing services involving own or leased non-residential property," subject to GST at 18%. The ruling classified the service provided by the applicant as taxable under SAC 997212.

8. Ultimately, the ruling determined that the service provided by the Cargo Handling company is classified as "Rental or leasing services involving own or leased non-residential property" and is subject to GST at 18%.