In Re: Gubba Cold Storage Private Limited - Ruling dated Jan.04, 2020 - Authority for Advance Rulings (Telangana)
Facts: The taxpayer provides the service of storage of agricultural produce. It has taken cold storage facility on lease / rent.
Query/(ies): What is the GST implication on the outward supply of storage of agricultural produce? What is the GST implication on the inward supply of leasing / renting of cold storage facility?
Observations / Ruling: Renting / leasing of cold storage premises (which is used for storing agricultural produce) is in the nature of renting of immovable property. In this, the lessor is not involved in storage of agricultural produce. The service of providing non-residential property on lease / rent basis is classified under HSN 997212. Supply of such service attracts GST @ 18%.
On the other hand, storage or warehousing of agricultural produce is exempt from GST vide Entry 54(e) of Notification No.12/2017-Central Tax (Rate) dated June 28, 2017 (as amended till date).
Comment(s): Taxpayers often assume exemption on renting of cold storage premises and fail to distinguish such service of renting of immovable property vis-a-vis storage of agricultural produce.
Moreover, the GST paid to the supplier of lease / renting service (viz., the owner of cold storage) is an exclusive ineligible credit for the taxpayer engaged in providing the service of storage of agricultural produce [ref: Section 17 of CGST Act read with Rule 42 of CGST Rules]. Input tax credit of such GST paid should not be availed. Hence, such cost should be factored in the output service.
