TMI Blog2019 (2) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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 applicant s case, as per its agreement with the Nodal Agency, falls under the PEG scheme of Lease and services basis type. As per the scheme of classification of services appended to notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 and its corresponding State tax notification no. 46/ST-2, dated 30.06.2017 the service code 997212 is for renting or leasing services involving own or leased non-residential property. Such services attract 18% GST as per Sr. no. 16 of notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 and its corresponding State tax notification no. 46/ST-2, dated 30.06.2017 - Since, as per the copy of contract/agreement with Hafed, the applicant is providing both the services, i.e., the support services in relation to agricultural produce as well as Real Estate Services in terms of SAC 997212, and since both these services are capable of being provided independent of each other, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 under the PEG scheme of Lease and services basis type. 7. In terms of the provisions of the Central Goods and Services Tax Act, 2017 (in short GST Act) Rent received on leasing of Immoveable Property is taxable, while the Storage or Warehousing of Agricultural Produce (Wheat Paddy) and Rice is exempt from GST. 8. In terms of the agreement between the nodal agency and the private investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement between FCI and Nodal agencies is in the nature of Storage and Warehousing services and that Storage and Warehousing services for agriculture produce, food grains including Pulses, Rice etc. is fully exempted 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 ₹ 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 ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business of leasing/renting warehouses/godowns and any services, if rendered, are ancillary and incidental thereto. Hence, the said agreement falls within the scope of supply as defined under section 7 of HGST/CGST Act, 2017. 13.4 Further it will not be out of place to mention that the agreement between the owner of the godowns and HAFED is having commercial terms and conditions which itself shows that the godowns have been given on rent or lease for commercial purposes and not for supporting cultivation of plant. 13.5 Explanation F. No.354/173/2017-TRU dated 15-11-2017 appended by the present applicant in support of his claim does not squarely 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply 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. 19. Accordingly, during the year 2011, HAFED invited tenders from private parties, for construction of godowns for FCI Storage Requirements to be managed and supervised by HAFED for a guaranteed lease of Ten years on Build, Own Operate/ lease basis for varying capacities for storage of food grains at various locations in the State of Haryana. 20. M/S Awla Infra, the applicant participated in the above tender enquiry and on being successful at the tender enquiry, were issued Letter of Allotment for Construction of godowns for specified capacity at one location (Elenabad) under the said PEG-2008 Scheme of the Govt. of India at agreed rates of rent per quintal per month. 21. Under the said PEG-2008 Scheme, there are two types of PEGS - (i) On Lease only basis and (ii) On Lease and Services basis. 21.1 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, 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 . 26. Further, as per the scheme of classification of services appended to notification no. 11/2017-Central Tax (Rate), dated 28.06.2017 and its corresponding State tax notification no. 46/ST-2, dated 30.06.2017 the service code 997212 is for renting or leasing services involving own or leased non-residential property. Such services attract 18% GST as per Sr. no. 16 of notification n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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