In re Stellar Cold Chain Inc (GST AAR Uttarakhand)
Background: M/s Stellar Cold Chain Inc., a registered partnership firm, is in the business of providing cold storage services for frozen peas. The company’s clients (bailors) process fresh peas by shelling, boiling (blanching), cooling, and freezing them to -18°C or below. These processed peas are then stored in Stellar Cold Chain’s facility. The core issue before the Goods and Services Tax (GST) Authority for Advance Ruling (AAR), Uttarakhand, was whether the services of storing these frozen peas are exempt from GST.
The Applicant’s Case: The applicant, Stellar Cold Chain Inc., argued that their service of storing frozen peas should be exempt from GST. They based their argument on Entry No. 24B of Notification No. 12/2017-Central Tax (Rate), as amended, which provides a Nil rate of tax for “Services by way of storage or warehousing of cereals, pulses, fruits, and vegetables.”
The company contended that the processing of peas, which involves shelling, blanching, and freezing, does not change the essential character of the product. They maintained that the product remains a “vegetable” and thus, the storage service should be exempt. To support this, they cited several judicial precedents:
- Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. Pia Food Packers [1980 (6) ELT 343 (SC)]: The Hon’ble Supreme Court held that slicing and canning pineapple did not alter its character as a fruit and was not considered a manufacturing process. Stellar Cold Chain Inc. used this precedent to argue that their processing of peas was merely for preservation and not a manufacturing activity that would change the product’s fundamental nature.
- Gujarat Co-operative Milk Marketing Federation Ltd. vs. Union of India (2020) 115 taxmann.com 24 (Gujarat): The Hon’ble Gujarat High Court ruled that the storage of milk, which requires chilling to prevent spoilage, includes the chilling process. This was presented to demonstrate that the freezing temperature maintained in their cold storage is an incidental and necessary part of the storage service itself.
The applicant further emphasized that “frozen peas” are explicitly classified under Tariff Code 0710.21.00 of the Harmonized System of Nomenclature (HSN), which is titled “Vegetables (uncooked or cooked by steaming or boiling in water), frozen.” This, they asserted, is a clear indication that the product, even after processing, retains its identity as a vegetable.
