In Re: M/s. Awla Infra
GST
2019 (2) TMI 1002 – AUTHORITY FOR ADVANCE RULING, HARYANA – 2019 (22) G. S. T. L. 149 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, HARYANA – AAR
Dated:- 11-9-2018
AAR No. HAR/HAAR/R/2018-19/13 In Application No. : 13/2018-19
GST
SANGEETA KARMAKAR AND VIJAY KUMAR SINGH, MEMBER
Present for the Applicant: Dr. Subash C. Batra, GM (Warehousing Operations) .
Factual Background As Per Applicant
1. A Scheme known as “SCHEME FOR CONSTRUCTION OF GODOWNS FOR FCI – STORAGE REQUIREMENTS, THROUGH PRIVATE ENTERPRENEURS – 2008” (in short known as PEG-2008 Scheme) was framed by the Food Corporation of India (FCI) at the behest of Government of India. The details of the scheme are available on the official web-site of the FCI.
2. The Haryana State Cooperative Supply and Marketing Federation Ltd. (HAFED) was notified as nodal agency for construction of godowns in the State of Haryana under the said PEG-2008 Scheme of the Central Government/ FCI.
3.
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al Agency (HAFED) and the FCI. This is a tripartite arrangement where one agreement has been executed between the private investor and the nodal agency and the other agreement has been executed between the nodal agency and the FCI. Copy of the agreement between the Private Investor and the HAFED is placed on record at Annexure-3.
6. Under the said PEG-2008 Scheme, there are two types of PEGs –
(i) On Lease only basis and
(ii) On Lease and Services basis.
In case of Lease only basis, godowns have been built by the Private Investor and have been leased out to the Nodal Agency which manages storage, preservation and warehousing of the stocks of the FCI stored therein.
In case of Lease and Services basis, godowns have been built by the Private Investor and have been leased out to the Nodal Agency and the storage, preservation and warehousing of the stocks of the FCI stored therein is managed by the Private Investor under the supervision of the Nodal Agency.
The present case falls und
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clause is understood to be as under:-
9.1 – For godowns hired on lease & services basis: Storage charges for godowns constructed for lease & services by Private Investors and supervised by the Nodal Agency shall be reimbursed to the Nodal Agency at the monthly rates/qtl. as approved by SLC/HLC for lease & services. FCI shall also pay to the Nodal Agency, 15% of the monthly rates/qtl. as approved by SLC/HLC as supervision charges on submission of separate bills. There shall be annual increase of 33% of percentage increase in WPI in rent (Rate approved by HLC/SLC) for such godowns provided on lease with services by Private Investors to the Nodal Agency. Private Investors will be responsible for the payment of service tax as applicable on storage charges of food grains and claim the same from FCI through the Nodal Agency.
10. Private investors were made to quote the rates of monthly rentals exclusive of the taxes, as a result of which ibid provisions were made in the agreements between
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ed under GST. Copy of this letter dated 07.09.2017 of the FCI is placed on record as Annexure-4.
Question(s) on which advance ruling is required
'Whether GST is exempt or is applicable on the Private Entrepreneurs Godowns built under the PEG-2008 scheme of the FCI and leased out to the Nodal Agency (UPSWC) on 'Lease and services basis' for the storage of FCl's food grain stocks (Wheat)'.
Applicant's interpretation of law and/or facts, in respect of the aforesaid question(s)
12. Under the Service Tax regime, District Office, FCI, Hisar released the amount of service tax of Rs. 3.43 crores to the applicant through the nodal agency – HAFED continuously for a period of more than three years on their raising the invoices and it was only after receiving the amount from the FCI/ HAFED, they had deposited the service tax with the treasury. FCI, District Office, Hisar, however, subsequently in the fourth year, recovered/withheld the entire amount of Rs. 3.43 crores from their subsequent ren
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poses to Hafed, thus the amount received on account of Rent/lease is taxable being supply of taxable services falling under section 7 of HGST Act, 2017.
13.2 It is further pointed out that as per Notification No.46/ST-2 dated 30th June 2017 Haryana Goods and Services Tax Act (Rate), Sr.No.24 and Notification No. 47/ST-2 dated 30the June 2017 Haryana Goods and Services Tax Act (Rate) Sr.No.54, the GST Rate on loading, unloading, packing, shortage or warehousing of agriculture produce is Nil but renting of immovable properties i.e. Godowns given for commercial use is not covered in the above said notifications and is thus not exempt from the levy of GST. The intention of the exemption given to the agriculture services under heading 9986 at Sr. No. 24 of the notification no. 46/ ST-2 of 2017 is the exemption to the support services for agriculture which means services relating to cultivation of plants and rearing of all life forms of animals etc. i.e. where such services are extended for
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ely cover the case of the present applicant as in the said explanation only the term Market Produce is defined and in the end of the said definition “any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market” only are covered. Further it has been submitted that the contract between Hafed and the present applicant reveals that the lessee shall provide insecticides, fumigation, spraying equipments etc. which are not applied when the agriculture produce is sold in the primary market.
13.6 In view of facts and submissions made above, it is obvious that the amount of rent paid by Hafed to the owner of godowns is taxable in the hands of owner of godowns, whether to
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her side it is the FCI and we as private investor are only intermediary and as intermediary we cannot be put to any harassment or made to suffer for the reason that there is any ambiguity in the rules or the activity involved is open to different interpretation.
16. After detailed discussions the application was admitted being covered by clauses (a) & (b) of section 97 (2) of the CGST/HGST Act 2017. As regard merits, the decision was reserved which is being released today.
Discussion and finding of the authority
17. As per the documents placed on record it is understood that under the scheme for construction of godowns for FCl-storage requirement through private entrepreneurs2008 (known as PEG-2008 scheme), the Haryana State Co-operative Supply and Marketing Federation Ltd. (Hafed) was notified as Nodal Agency for construction of godowns in the State of Haryana.
18. The Haryana State Cooperative Supply and Marketing Federation Ltd. (HAFED) was notified as nodal agency for construct
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have been leased out to the Nodal Agency which manages storage, preservation and warehousing of the stocks of the FCI stored therein.
21.2 In case of Lease and Services basis, godowns have been built by the Private Investor and have been leased out to the Nodal Agency and the storage, preservation and warehousing of the stocks of the FCI stored therein is managed by the Private Investor under the supervision of the Nodal Agency.
21.3 The applicant's case, as per its agreement with the Nodal Agency, falls under the PEG scheme of 'Lease and services basis' type.
22. The applicant has brought in our notice a letter no. SF-19/GST/2018-19/Fin/GST-63, dated 31.07.2018 wherein the Food Corporation of India has clarified the applicability of GST on services provided by private investors to Nodal Agencies under PEG schemes as under:-
1. Agreements of Nodal Agencies with private investors in case of PEG godowns on 'Lease Only Basis'.
The agreement between Nodal Agencies with Private Inves
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ions for the purpose of understanding the nature of the services provided by the applicant are as per Sr. No. 24 (e) of notification no. 11 /2017-Central Tax (Rate), dated 28.06.2017 and Sr. No. 54 (e) of notification no. 12/ 2017-Central Tax (Rate), dated 28.06.2017 read with the corresponding State Tax notification No. 46/ST-2 & 47/ST-2 both dated 30.06.2017. The SAC 9972 is also relevant to determine the true classification of the services provided by the applicant.
25. The scope of entry 24 (e) and 54 (e) in respective notification no. 11 and 12 of Central Tax (Rate) are limited to services in relation to agriculture produce and cultivation of plants. The term agriculture produce has further been defined in clear terms by way of explanation (vii) appended to the said notification no. 11 and definition (d) appended to the said notification no. 12 as under:-
“Any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, f
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12, and since both these services are capable of being provided independent of each other, these cannot be understood to be naturally bundled and supplied conjointly in the ordinary course of business. Therefore, the applicant has/is providing 'Mixed Supply' as per section 2 (74) of the CGST/HGST Act, 2017 and attract tax rate of that particular supply which attracts the highest rate of tax in terms of section 8 (b) of the Act ibid.
Advance ruling under section 98 of the CGST/HGST Act 2017
In the backdrop of above discussions and findings the advance ruling on the questions is pronounced as under: –
'Whether GST is exempt or is applicable on the Private Entrepreneurs Godowns built under the PEG-2008 scheme of the FCI and leased out to the Nodal Agency (UPSWC) on 'Lease and services basis' for the storage of FCl's food grain stocks (Wheat)'.
Ruling
In view of the above discussions and findings it is ruled that the services, i.e., leasing of immovable property and support services i
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