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TMI Blog2019 (2) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Copy of the Tender Document is placed at Annexure-2 on record. 4. M/s. Awla Infra 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. 5. M/s. Awla Infra accordingly constructed storage capacity at one location (Elenabad) under the said scheme in terms of the respective Letter of Allotment. Agreements were signed between the Private Investor (M/s. Awla Infra) and the Nodal Agency (HAFED) and between the Nodal 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 private investors and nodal agency and between nodal agency and FCI. With the substitution of Service Tax Act by the GST Act by the Govt. of India, the above provisions in the agreements have apparently to be read as, "Private Investors will be responsible for the payment of GST as applicable on storage charges of food grains and claim the same from FCI through the Nodal Agency". 11. GST Cell of FCI Head Office at New Delhi has issued Letter No. F-19/GST/2016-17/Partl/Fin/GST_29 dated 07.09.2017 regarding applicability of GST as per which the present case falls under Sr. No. 1 - Agreements of FCI with nodal agencies (where Private investors construct godowns). According to this letter dated 07.09.2017 of the FCI, in case of both type of scheme with or without services the agreement 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 exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the cultivation of plants. 13.3 The plain reading of both the notifications makes it amply clear that the renting/leasing of warehouse by the applicant is not extended for cultivation of plants. The dominant intention which can be deciphered from the lease agreement between the present applicant and HAFED is that the present applicant is in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other 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 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 constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FCI and no other commodity other than wheat has been in storage in their PEG. However, as per clause 19 of the contract agreement between Hafed and the applicant it is clearly mentioned that the Lessee, though hiring these spaces for keeping FCI and /or its own food stocks, however, Lessee will be free to use these spaces for keeping stocks belonging to any other party. 24. The relevant notifications 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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