For any service to qualify as warehousing services it is not imperative that negotiable warehousing receipts must have been issued for them

In re Haryana State Warehousing Corporation (GST AAAR Haryana)

The contention of the Appellant that all the services provided by the warehouse owner qualify as warehousing services is not tenable as the Appellant has tried to expand the scope of warehouse services as mentioned in entry 54 of the of the Notification No. 47/ST-2, dated 30^th June, 2017 of the Haryana Government Excise and Taxation Department reproduced above. The argument of the appellant regarding storage and warehousing services explained in circular F.No. B/11/1/2002-TRU, dated 01.08.2002 issued by Central Government includes the lien and storage charges as contended by the Appellant, does not hold water at all.

Sub-section 4(1) of the Warehousing (Development and Regulation) Act, 2007 provides that any person desirous of commencing or carrying on the business of maintaining a warehouse issuing negotiable warehouse receipts may make an application to the Authority for registration in respect of one or more warehouses owned or occupied by him. Further, section 2(m) of the said act provides that “negotiable warehouse receipt” means a warehouse receipt under which the goods represented therein are deliverable to the depositor or order, the endorsement of which has the effect of transfer of goods represented thereby and the endorsee for which takes a good title. As per second proviso to section 3 of the said Act, no such registration shall be required for warehouses which do not propose to issue negotiable warehouse receipt.

Therefore, even if a warehouse operator is not issuing any negotiable warehouse receipts and is not registered under the Warehousing (Development and Regulation) Act, 2007, the other services provided by him (i.e. other than lien ‘or mortgage charges and stock transfer fees) shall qualify as warehousing services. Therefore, for any service to qualify as warehousing services it is not imperative that negotiable warehousing receipts must have been issued for them. Therefore, scope of storage or warehousing services cannot be expanded to unlimited extent. Only the services similar to the services mentioned in the entry can be construed as included therein.

From the above, it is clear that the lien or mortgage charges and stock transfer fees received by the applicant from the service receiver are taxable under Section 9 of Central Goods and Services Tax Act, 2017 and Section 9 of Haryana Goods and Services Tax Act, 2017 and do not fall in exemption category as provided in entry no. 54 of the Notification dated 30^th June, 2017 of the Haryana Government Excise and Taxation Department.

FULL  TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING,HARYANA

The present appeal has been filed under Section 100(1) of the Central Goods and Services Tax Act, 2017/the Haryana Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and HGST Act respectively”] by M/s Haryana State Warehousing Corporation [hereinafter referred to as the “Appellant”] against the Advance Ruling No. HAR/HAAR/R/2018-19/38, dated 22.02.2019.

A copy of order dated 22.02.2019 of the Advance Ruling Authority was received by the appellant on 13.03.2019 and the appeal has been filed on 11.04.2019 which is in time.

Brief Facts of the case:

The appellant namely M/s Haryana State Warehousing Corporation has been incorporated under the Warehousing Corporation Act, 1962, an Act of Parliament. The Appellant provides services of storage and warehousing of both agricultural and non-agricultural produce. The Appellant had sought Advance

“Whether lien or mortgage charges and stock transfer fees received by the applicant from the service receiver are taxable under Section 9 of Central Goods and Services Tax Act, 2017 and Section 9 of Haryana Goods and Services Tax Act, 2017 or exempt under Section 11 of Central Goods and Services Tax Act, 2017 and Section 11 of Haryana Goods and Services Tax Act, 2017 with respect to both agricultural and non-agricultural produce stored and, warehoused in the warehouses of the applicant?”

After notice and opportunity, the Advance Ruling Authority passed the impugned order wherein the Advance Ruling Authority has held that the lien or mortgage charges and stock transfer fees received by the applicant from the service receiver are taxable under Section 9 of the CGST Act, 2017/HGST Act, 2017.

Pleadings of the Appellant:

1. That the Advance Ruling is patently against law, unjust, erroneously passed without any application of mind.

2. That on the facts of the case and law, AAR has erred in holding that Stock transfer fees and lien/mortgage charges are not warehousing services.

3. That AAR has failed to differentiate between storage and warehousing services.

4. That AAR has not taken into consideration rules of interpretation as per the General Clauses Act.

5. That AAR has not taken into consideration all the arguments given by the Appellant.

Record of personal hearing:

Sh. Nalin Kumar Nohria, CA, appearing for the appellant has reiterated the grounds taken in the memorandum of appeal. He has contended that warehousing and storage are not mere synonyms. The term warehousing is a vast term which is not defined under any Act of the Parliament (as per knowledge and information of the Appellant). He has further stressed that the issue in question has been explained by CBEC vide a circular F.No. 6/11/1/2002-TRU, dated 01.08.2002. He has stated that the circular was clarificatory in nature and the relevant extract of the said circular is as under:-

“the storage and warehousing service provider normally makes arrangements for space to keep the goods, loading, unloading and the stocking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc.”

The contention of the appellant is that the Hon’ble Haryana Authority for Advance Ruling overlooked the fact that the services provided by storage and warehousing service provider are not limited to the ones mentioned in the said circular. The circular itself mentions for various services provided by the storage and warehousing service but did not restrict itself to the services mentioned therein. The definition of a word or expression in the definition section may either be restricting of its ordinary meaning or may be extensive of the same. When a word is defined to “mean” such and such, the definition is ‘prima facie’ restrictive and exhaustive we must restrict the meaning of the word to that given in the definition section. But where the word is defined to “include” such and such, the definition is ‘prima facie’ extensive: here the word defined is not restrictive to the meaning assigned to it but has an extensive meaning which also include the meaning assigned to it in the definition section. In the given case, the definition of warehousing given in the circular is not exhaustive definition but an extensive definition. The words “normally” and “etc” confirms this proposition that the definition is extensive one. The function of warehousing includes storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc as per the circular.

He also referred to serial no. 54 of the Notification No. 12/2017 —Central Tax (Rate) dated 28.06.2017 wherein Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of loading, unloading, packing, storage or warehousing of agricultural produce is ‘exempt under section 11 of the Central Goods and Service Tax Act, 2017. Similar Notification No. 47/ST-2, dated 30.06.2017 has been issued under section 11 of the Haryana goods and Service Tax Act, 2017.

Basing his case on the above arguments, he stressed that the lien or mortgage charges and stock transfer fees received by the Appellant is covered under the above Notification and thus, is not liable to tax under ‘the CGST Act, 2017/H GST Act, 2017.

We have heard Sh. Nalin Kumar Nohria, CA assisted by Sh. Bimal Kumar Nohria, CA & Sh. Vimlesh Kumar, AA, Haryana State Warehousing Corporation (HSWC) for the appellant in detail and have perused the record of this case thoroughly. The Warehousing Development and Regulation Act has also been perused wherein Section 2(t) deals with warehousing business and warehouse receipt and are reproduced below:

Section 2(t) “warehousing business” means the Business of maintaining warehouses in storage of goods and issuing negotiable warehouse receipts.

Section 2(u) “warehouse receipt’ means and acknowledgement in writing or in electronic form issued by a warehouseman or his duly authorised representative (including deposit by whatever name called) of the receipt for storage of goods not owned by the warehouseman).

Entry 54 of the Notification No. 47/ST-2, dated 30^th June, 2017 of the Haryana Government Excise and Taxation Department is as under:

The contention of the Appellant that all the services provided by the warehouse owner qualify as warehousing services is not tenable as the Appellant has tried to expand the scope of warehouse services as mentioned in entry 54 of the of the Notification No. 47/ST-2, dated 30^th June, 2017 of the Haryana Government Excise and Taxation Department reproduced above. The argument of the appellant regarding storage and warehousing services explained in circular F.No. B/11/1/2002-TRU, dated 01.08.2002 issued by Central Government includes the lien and storage charges as contended by the Appellant, does not hold water at all.

Sub-section 4(1) of the Warehousing (Development and Regulation) Act, 2007 provides that any person desirous of commencing or carrying on the business of maintaining a warehouse issuing negotiable warehouse receipts may make an application to the Authority for registration in respect of one or more warehouses owned or occupied by him. Further, section 2(m) of the said act provides that “negotiable warehouse receipt” means a warehouse receipt under which the goods represented therein are deliverable to the depositor or order, the endorsement of which has the effect of transfer of goods represented thereby and the endorsee for which takes a good title. As per second proviso to section 3 of the said Act, no such registration shall be required for warehouses which do not propose to issue negotiable warehouse receipt.

Therefore, even if a warehouse operator is not issuing any negotiable warehouse receipts and is not registered under the Warehousing (Development and Regulation) Act, 2007, the other services provided by him (i.e. other than lien ‘or mortgage charges and stock transfer fees) shall qualify as warehousing services. Therefore, for any service to qualify as warehousing services it is not imperative that negotiable warehousing receipts must have been issued for them. Therefore, scope of storage or warehousing services cannot be expanded to unlimited extent. Only the services similar to the services mentioned in the entry can be construed as included therein.

From the above, it is clear that the lien or mortgage charges and stock transfer fees received by the applicant from the service receiver are taxable under Section 9 of Central Goods and Services Tax Act, 2017 and Section 9 of Haryana Goods and Services Tax Act, 2017 and do not fall in exemption category as provided in entry no. 54 of the Notification dated 30^th June, 2017 of the Haryana Government Excise and Taxation Department.

In view of the above discussions and findings, we have no hesitation in dismissing the appeal and the Advance Ruling dated 22.02.2019 does not suffer from any infirmity or illegality and the same is upheld.

Decided accordingly.