Service Tax - Non-payment of service tax by State warehousing Corpn on let out Godowns
The Jalandhar Commissionerate has detected a case of non-payment of service tax in respect of godowns let out by State Warehousing Corporation on rental basis. The assessee has taken the plea that the clients use the godowns for storage of agricultural purpose and hence rental income is not chargeable to service tax, being exempted under the category of ‘Storage and Warehousing Service'.
Board clarifies:-
State Warehousing Corporation has merely rented out its godowns and did not provide any service as storage or warehousing keeper, they have provided the service of renting as defined under ‘renting of immovable property'. The storage or warehousing service provider is required to make arrangements for space to keep the goods, loading and un-loading and stacking of goods in storage areas, keeping inventory of goods, making security arrangements, providing insurance cover etc. The renting of immovable property has been brought under service tax w.e.f.1.6.2007 and prior to that merely renting out storage premises did not attract service tax. Now letting out storage premises on rent without providing any other service as defined under the storage and warehousing service attracts service tax under this category.
From the above it is clear that income/payment received from any person on account of rent is chargeable to service tax under the category ‘renting of immovable property', irrespective of the fact whether the space so rented is used for agricultural produce or otherwise as there is no such exemption.
Board wants the field to note this issue and initiate action to recover Service Tax.
CBEC's F. No. 137/26/2007- CX.4 Dated: 5th December, 2008