GST Exemption for Cold Storage of Agricultural Produce
Cold storage services for agricultural produce are exempt from GST regardless of whether the customer is a farmer or a trader.
- Ruling
- Order No. AAR/AP/02(GST)/2018 dated 28th March 2018
- Dated
- 28 Mar 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Storage of agricultural produce falls under Service Account Code (SAC) 9986.
- The GST exemption is service-specific, not limited to farmers.
- Traders storing agricultural produce also qualify for the nil tax rate.
- The Authority for Advance Ruling (AAR) did not specify required documentation.
In short
The company asked the Andhra Pradesh Authority for Advance Ruling (AAR) whether their cold storage services for agricultural produce were exempt from Goods and Services Tax (GST) when provided to traders, not just farmers.
What has changed
How it worked before
Many businesses were uncertain if the GST exemption for agricultural storage applied only to farmers or if it extended to traders who also store produce.
What has changed
The authority confirmed that the exemption is based on the nature of the service, not the identity of the customer. This means cold storage operators can provide these services at a nil tax rate to both farmers and traders, provided the goods stored qualify as agricultural produce.
Who this affects
Cold storage facility operators and businesses storing agricultural produce like pulses, spices, and seeds.
An example
A cold storage owner in Maharashtra stores spices for a local trader. They wonder if they must charge GST because the customer is a trader, not a farmer. Based on this ruling, the service remains exempt because it is the storage of agricultural produce that triggers the exemption, not the status of the person storing it.
What you should do
If you operate a cold storage, you may treat these services as exempt. However, remember that an advance ruling only binds the specific business that asked for it and their local tax office. You should consult your own tax advisor to ensure your specific goods qualify as agricultural produce before claiming the exemption.
If you do nothing
If you incorrectly claim an exemption, your local tax officer may issue a demand for unpaid GST, interest, and penalties. Relying on a ruling that does not apply to your specific case can lead to costly disputes during an audit. Always verify your tax position with a professional rather than assuming a precedent applies to your business.
The terms explained
- Service Account Code (SAC)
- A system of codes used to classify services for GST purposes, similar to how HSN codes classify goods.
- Nil rated
- A tax rate of zero percent, meaning no GST is collected on the service.
- Service-specific
- An exemption that applies based on the type of work performed, regardless of who is receiving or paying for that work.
The ruling in detail
Authority for Advance Ruling
M/s S S S V K COLD STORAGE PVT.LTD
Order No. AAR/AP/02(GST)/2018 dated 28th March 2018 · Andhra Pradesh
Questions before the authority
- Whether the storage of Agriculture produce falls under Service Account Code (SAC) 998619 or 996721 or some other SAC and rate of tax applicable for such storage of such produces if any.
- Whether the services falls under SAC 998619 the exemption under notification no 12/2017-CTR dated 28.06.2017 under entry no 54(e) is applicable to both farmers and traders.
- If benefit of Notification No 12/2017-CTR dated 28.06.2017 under Entry No 54(e) is applicable exclusively for farmers, then what are documents required to be taken by cold storage operator for availing exemption benefit.
Facts
The applicant operates a cold storage facility providing storage services for agricultural produce, including items like pulses, spices, and seeds, to both farmers and traders. They sought clarification on the appropriate Service Account Code (SAC) for these services and the applicability of tax exemptions under GST notifications. The applicant specifically requested guidance on whether the exemption for agricultural storage is restricted to farmers or extends to traders.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of storage services | SAC 9986 Not under 9967 |
| Applicability of exemption under Notification 12/2017-CTR | Applicable to both farmers and traders Entry 54(e) |
The Authority ruled that the storage and warehousing of agricultural produce is classified under SAC 9986. It further held that the exemption provided under entry 54(e) of Notification No. 12/2017-Central Tax (Rate) is service-specific rather than person-specific, and therefore applies to agricultural produce belonging to both farmers and traders. The Authority declined to rule on the specific documentation required for claiming the exemption, stating it falls outside the scope of the advance ruling authority.
Reasoning
The Authority examined the scope of Heading 9986, which covers support services to agriculture, including storage and warehousing of agricultural produce. It concluded that these services are **nil rated** under the relevant notification provided the goods meet the definition of agricultural produce. The Authority emphasized that the exemption is **service-specific** and not restricted to the status of the service recipient. Consequently, the benefit extends to traders as long as the stored commodities qualify as agricultural produce.
Provisions relied on
- Section 104 of APGST Act 2017
- Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017
- Circular No. 16/16/2017-GST dated 15th November 2017
For the practitioner
This ruling provides clarity that cold storage services for agricultural produce are classified under SAC 9986 and qualify for the **nil rate of tax** under Notification 12/2017-CTR. It confirms that the exemption is **not person-specific**, allowing cold storage operators to extend the benefit to traders. However, practitioners should note that the Authority refused to provide a list of required documentation, leaving that aspect to be determined by general compliance requirements.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/ap_02-2018_dt_28-03-18_sssvk_cold_storage.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
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