GST Caselaw

#GSTCase-79- Difference between ‘storage or warehousing’ service and ‘renting of storage premises’ service explained- (AAR Gujarat)

#GSTCase-79- Difference between ‘storage or warehousing’ service and ‘renting of storage premises’ service explained- (AAR Gujarat)

                                                                                                                                                By CA Arpit Haldia

 Rishi Shipping. [2018] 94 taxmann.com 147 (AAR – GUJARAT)

 

  1. Query

What would be applicability of GST on storage charges for storing imported agriproduct in godowns.

 

  1. Facts

The applicant has submitted that they do not have their own warehouse/godown space. They have occupied the same from Government/Private parties. As a part of their services, they provide service of warehouse/space on rent to their customers, where they store imported agricultural commodities.

Applicant submitted sample copies of invoices and description of service has been mentioned as Godown Rent (SAC -997212) and GST has been paid @ 18% (CGST 9% + SGST 9% or IGST 18%). Applicant did not submit anything towards its interpretation of law and/or facts to support that the Goods and Services Tax is not applicable to the aforesaid activity carried out by them.

 

  1. Observation by AAR

There is a difference between ‘storage or warehousing’ service and ‘renting of storage premises’ service. ‘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.

The applicant has submitted in the application that as a part of their services, it provides service of warehouse/space on rent to their customers, where they (customers of applicant) store imported agricultural commodities. 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.

 

  1. Held

Services provided by the applicant are classifiable as ‘Rental or leasing services involving own or leased non-residential property’ (Service Accounting Code – 9972) leviable to Goods and Services Tax @ 18%.

 

  1. Comment:

There is a very fine difference between renting and warehousing. The difference between renting and warehousing has been explained by CBEC in F. No. B11/1/2002-TRU, dated 1-8-2002, wherein it has been clarified that

Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, by agencies such as the Central Ware Housing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage godown and tankers operated by private individuals etc. 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. 

5.It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area.

                                                                                                                                                Emphasis Supplied

The difference has been explained by CBEC and on AAR has also given the decision on same line. Storage and Warehousing Services primarily include “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.” and Renting service covers only renting of space without any additional facility.

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