Godown Rent for Agricultural Warehousing Attracts 18% GST: AAR Gujarat

In re Gujarat State Warehousing Corporation (GST AAR Gujarat)

Summary: The Gujarat Authority for Advance Ruling considered whether GST is payable on rent paid by Gujarat State Warehousing Corporation for godowns hired exclusively for storage and warehousing of raw agricultural produce and, if so, whether the liability arises under Reverse Charge Mechanism (RCM) or Forward Charge Mechanism (FCM). The applicant, a Government of Gujarat undertaking, provides storage and warehousing services for raw agricultural produce such as groundnut, gram (chana), toor, moong and similar commodities on behalf of agencies including NAFED and NCCF under procurement and farmer welfare schemes. It uses both owned and hired godowns, including premises rented from registered and unregistered persons. The applicant treated its warehousing services as exempt under Entry No. 54(e) of Notification No.12/2017 — Central Tax (Rate) and consequently did not initially discharge GST under RCM on godown rent. After Notification No.09/2024 dated 08.10.2024, it started depositing GST under RCM from December 2024 as a matter of abundant caution.

The Authority held that two separate supplies were involved: first, hiring of godowns by the applicant from registered or unregistered persons against payment of rent; and second, provision by the applicant of storage and warehousing services for raw agricultural produce. These supplies were required to be examined independently. Referring to Section 7 of the CGST Act, 2017, the Authority held that both activities qualified as “supply”. Although storage and warehousing of agricultural produce is exempt under Entry No.54(e) of Notification No.12/2017-Central Tax (Rate), that exemption does not extend to the separate service of renting the godown merely because the rented premises are ultimately used for an exempt warehousing activity.