Indian Service Tax
Storage And Warehousing Service
Effective Date: 16/08/2002.
Authority: Notification No. 8/2002-ST, dt. 1/8/2002 (for full text of Notification see under'Beauty Parlour').
Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10%from10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.
Definition: "storage and warehousing"includes storage and warehousing servicesforgoods including liquids and gases but does not include any service providedforstorage of agricultural produce or any service provided by a cold storage; [Section 65(102)]
Taxable service: Storage and warehousing services provided by a storage or warehouse keeper in relation to storage of goods except agricultural produce or service provided by cold storage.
Value of taxable service: Gross amount charged by the storage or warehouse keeperfromthe customers.
Exemptions
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Agricultural produce, cold storage
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Cloak room services
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FCI
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Renting of premises
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Port trust
Person liable to pay: StorageorWarehouse keeper.
Head of Account
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Main text of Departmental Circular/TN
F.No. B11/1/2002-TRU, Date: 1/8/2002
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The section referred to hereinafter are the sectionsorclauses of the Finance Act, 1994 as amended by the Finance Act, 2002. Reference to subclauseorclause means clauseorsub-clause of Section 65 of the Finance Act, 1994 as amen led by the Finance Act, 2002.
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As per clause (87), "storage and warehousing" includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage. As per sub-clause (zza) of clause (90), the taxable service is any service provided, to any person, by a storage or warehouse keeper in relation to storage and warehousing of goods.
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Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, by agencies such as the Central Ware Housing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage godown and tankers operated by private individuals etc. The storage and warehousing service provider normally make ahrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc. Service provided in ports has already been covered under the category of port service.
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Service provided in relation to agriculture produce and service provided by cold storage is outside the ambit of the levy. Doubts have been raised about the scope of term “agricultural produce". In order to clarify the scope of this tem1 beyond doubts, an order has been issued under the power vested under Section 95 of the Finance Act (see Order No. 1/2002-ST, dated 1/8/2002). As clarified in the order, the term agricultural produce would cover all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, and similar products. However, manufactured products such as sugar, edible oils, processed food etc., will not come under the purview of the term 'agricultural produce'.
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It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area.
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A point has been raised by the Airport Authority of India (AAI) that they have established cold storage for perishable goods at cargo complexes at various places as part of cargo warehousing activities and whether the exemption provided in respect of cold storage would be applicable to these cold storages also. It is clarified that service provided by a cold storage has been specifically excluded fTom the tax net. Therefore the service of cold storage provided by AAI will also be exempt.
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Another point raised is that AAI are collecting terminal charges which is only a facilitation charge for providing a terminal and as such does not involve any service. As per the Notification No. Cargo/ 13519/Pt. I , dated 4/6/1993 of the Intemational Airport Authority of India "terminal charges" means charges payable to or collected by the Authority or Cargo Handling Agency for use of facilities for processing of cargo. As per this notification "storage and processing charges" specifically include terminal charges also. Therefore service tax is leviable on such charges.
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A doubt has been raised whether cloak room services for passenger's luggage in railway stations, bus stations etc., would come within the purview of storage and warehousing services. It is clarified that these are passenger terminal services incidental to rail transport qr road transport, they do not come within the purview of storage and warehousing services.
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The Central Warehousing Corporation has stated that they have more than 450 warehouses which are controlled by 17 regional offices. The billing is done both at the warehouse level and at the Regional Office level. However accounting for the warehousing charges as well as the cargo handling services is done only at the Regional Office level. Therefore, they have requested that only their Regional Offices should be registered for service tax purposes. The Service Tax rules empower the Commissioner of Central Excise to register only those offices which have centralised accounting facility. The Commissioners may exercise this power in such cases and register only the regional offices of CWC.
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Another point made by the CWC is that they engage handling and transport contractors (H&T contractors) to provide handling and transport services who would be charging them service tax for cargo handling services. CWC add supervision charges and raises the bill to the customers. For warehousing they raise a separate bill. The question is whether CWC is liable to pay service tax on cargo handling services and if so, whether they can take credit of the tax paid on cargo handling services by the H&T contractor. Similar situations may exist in respect of other storage and warehouse keepers. It is clarified that if the storage and warehouse keeper undertakes cargo handling services also and raises its own bill to the customer for such service, then he would be liable to pay service tax under the category of cargo handling services also. However, he would be eligible to take credit of service tax paid on cargo handling services rendered by the H&T contractors and adjust the same against his service tax liability on cargo handling services provided he raises a separate bill for the same to his client. In other words, he cannot adjust the credit against storage and warehousing service charges.
Storage of empty containers
Cir. No. 60/9/2003-ST, Date: 10/7/2003
Sub:- Levy of service tax on storage of empty containers regarding.
I am directed to say that a doubt has been raised regarding levy of service tax on storage of empty containers. The matter has been examined. It is clarified that the handling/storage and warehousing of empty containers would be covered within the scope of storage and warehousing services, as it is covered under the heading goods under Section 65(87) of the Finance Act, 1994. The Service Tax would be leviable on it. Further, the clarification issued vide letter No. F.B.II/ I/2002/TRU, dated 1/8/2002 regarding empty containers not to be considered as Cargo for Cargo Handling Services, has no relevance in the instant case.
Storage of liquid cargo
Order No. 2/1/2002-ST, Date: 24/4/2002
N.B.: For full text see under "Clearing & Forwarding Agent".
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