The Gujarat Authority for Advance Rulings (AAR) ruled that renting godowns to store exempt agricultural produce attracts an 18% GST, regardless of the produce's exempt status. M/s. Gujarat State Warehousing Corporation, a government entity, used both owned and rented godowns for storing agricultural produce like groundnut and gram under welfare schemes. Initially, the Corporation did not pay GST on rent for godowns, considering its services exempt under Entry No. 54(e) of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017. However, after Notification No. 09/2024-Central Tax (Rate), dated 8 October 2024, it started paying GST under the Reverse Charge Mechanism (RCM) as a precaution.
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The Corporation sought clarification on GST applicability for godown rent, whether it should be paid under the Forward Charge Mechanism (FCM) or RCM, and the applicable rate. The AAR determined that renting godowns and providing agricultural warehousing services are separate transactions under Section 7 of the CGST Act, 2017. While warehousing services for agricultural produce are exempt, this does not extend to godown rent. Renting non-residential godowns falls under Service Code 997212, requiring an 18% GST.
For godowns rented from registered landlords, GST is payable by the supplier under FCM. If rented from unregistered landlords, the Corporation must pay GST under RCM at 18% from 10 October 2024, following amendments to Notification No. 13/2017-Central Tax (Rate). The AAR clarified that a previous ruling from Tamil Nadu was not applicable to this case.
Order Date - 21 September 2026
Facts -
- M/s. Gujarat State Warehousing Corporation, a Government of Gujarat undertaking, provides storage and warehousing services for raw agricultural produce, including groundnut, gram, toor and moong, on behalf of agencies such as NAFED and NCCF under procurement and farmer welfare schemes.
- To provide these services, the Corporation uses both its own godowns and rented godowns taken from registered and unregistered landlords. It treated its agricultural storage and warehousing services as exempt under Entry No. 54(e) of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017.
- Since its warehousing services were exempt, the Corporation initially did not pay GST under the Reverse Charge Mechanism (RCM) on rent paid for hired godowns used exclusively for storing agricultural produce. Following Notification No. 09/2024-Central Tax (Rate), dated 8 October 2024, it began depositing GST under RCM from December 2024 as a precaution.
- The Corporation approached the Gujarat AAR to clarify whether GST applied to the rent paid for these godowns, whether the tax was payable under the Forward Charge Mechanism (FCM) or RCM, and what GST rate applied.
Issue -
- Whether rent paid for godowns used exclusively for storing exempt agricultural produce attracts GST at 18% and whether the tax must be paid by the landlord under FCM or by the Corporation under RCM.
Order -
- The AAR observed that renting godowns from landlords for consideration and providing agricultural warehousing services to agencies for consideration are two distinct transactions under Section 7 of the CGST Act, 2017. Each transaction must be examined independently to determine its GST treatment.
- The authority recognised that storage and warehousing services provided for raw agricultural produce, such as groundnut, gram, toor and moong, qualify for exemption under Entry No. 54(e) of Notification No. 12/2017-Central Tax (Rate), dated 28 June 2017. However, this exemption applies to the Corporation's outward warehousing services and does not automatically extend to the rent paid for hired godowns.
- The AAR held that renting non-residential godowns falls under Service Code 997212, covering rental or leasing services involving owned or leased non-residential property. Accordingly, GST is payable at 18%, comprising 9% CGST and 9% SGST, irrespective of whether the godowns are used exclusively for exempt agricultural warehousing.
- Where the Corporation rents godowns from registered persons, GST is payable by the supplier under FCM. However, where the godowns are rented from unregistered persons, the Corporation must pay GST under RCM at 18% from 10 October 2024, following the amendments to Notification No. 13/2017-Central Tax (Rate). The AAR also clarified that the advance ruling relied upon by the applicant from Tamil Nadu was not binding on the Gujarat authority.
