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service tax on cold storage
The service tax department is issuing notices to cold storages storing potatoes etc for registration regarding levy of service tax on renting of immovable property inspite of the fact that storage and warehousing services is already covered in clause zza which specifically exempts the service in r.t agricultural produce. How the matter should be dealt?
Replies (4)
Section 65 (102) of the Finance Act, 1994 defines storage and warehousing inclusively. The term storage and warehousing includes services provided with respect to goods, including liquids and gases, but not agricultural produce or any service provided by a cold storage.
It is therefore clear that service in relation to cold storage will be not be taxable under storage and warehousing services. But if a portion of cold storage is given on hire/rent on monthly rentals, then the nature of service changes and it may become a taxable service under Section 65(90)(a) which has been introduced w.e.f. June 1, 2007.
However, the explanation to the definition includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls, and multiple use buildings. In this particular case, nature of service and use of building are very important and if the nature of service is cold storage only, service tax may not be levied, as mode of payment (monthly rent) has nothing to do with taxability or otherwise of a service. In this case, nature of service in substance would prevail over form.
In view of this you may kindly evaluate your position and respond accordingly to the SCN
It is therefore clear that service in relation to cold storage will be not be taxable under storage and warehousing services. But if a portion of cold storage is given on hire/rent on monthly rentals, then the nature of service changes and it may become a taxable service under Section 65(90)(a) which has been introduced w.e.f. June 1, 2007.
However, the explanation to the definition includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls, and multiple use buildings. In this particular case, nature of service and use of building are very important and if the nature of service is cold storage only, service tax may not be levied, as mode of payment (monthly rent) has nothing to do with taxability or otherwise of a service. In this case, nature of service in substance would prevail over form.
In view of this you may kindly evaluate your position and respond accordingly to the SCN
ST may not be lived in case of cold stroag
See a good article buy one Rahul Jain on this very issue published in latest issue of Service Tax Today.
See a good article by one Rahul Jain on this very issue published in latest issue of Service Tax Today.
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