CA Omkar Deshpande
Recently, Karnataka AAAR in order number KAR /AAAR-14-I/2019-20 held that the services provided by Central Warehousing Corporation (CWC) are covered under ‘Rental or leasing services involving own or leased non-residential property’ and not under ‘storage and warehousing service’ and hence exemption is not available under entry no.54 (e)- Storage or warehousing of agricultural produce of Notification 12/ 2017 CT (R) dated 28-06-2017.
The reasoning for arriving at the abovementioned conclusion is stated in para 12 of the order which states that there is difference between ‘storage or warehousing service’ and ‘renting of storage premises’. The ‘storage and warehousing service’ provider normally makes 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 provides 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 can not be said to be said to be in nature of service provided for storage or warehousing of goods.
Most respectfully, I state, that AAAR has failed to appreciate that the words used in the notification are storage or warehousing, not storage and warehousing. Hence the services provided by CWC are squarely covered under entry no 54 ( e) loading, unloading, packing, storage or warehousing of agricultural produce; of exemption Notification 12/ 2017 CT (R) dated 28-06-2017 to the extent they relate to agricultural produce .
Furthermore, assuming without admitting, that the description ‘Rental or leasing services involving own or leased non-residential property’ provides a more accurate description of the services than storage of agricultural produce, still, the said principle that specific entry shall prevail over general entry is not applicable in case of ‘exemption entitlement’ as decided in catena of judgments.
Hence, with utmost respect, I state that the services of storage of agricultural produce are exempt from GST and the decision of the AAAR is not proper.