GST Exemption Rules for Cold Storage of Agricultural Goods
Rajasthan AAR ruled that cold storage for basic farm produce is GST exempt, while processed or polished crops attract GST.
- Ruling
- RAJ/AAR/2018-19/03 dated 11.06.2018
- Dated
- 11 Jun 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
- Cold storage facility asked if storing various crops is GST exempt.
- Basic cleaned produce in Group A qualifies as agricultural produce.
- Cold storage services for Group A items are exempt from GST.
- Processed or polished goods in Groups B to G attract GST.
In short
Sardar Mal Gold Storage asked the Rajasthan Authority for Advance Ruling whether providing cold storage services for various seeds, spices, dried fruits, and herbal goods is exempt from Goods and Services Tax (GST). The core issue was whether post-harvest activities like polishing, splitting, and dehusking stop goods from being treated as exempt agricultural produce under Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017-Central Tax (Rate).
What has changed
How it worked before
Before this ruling, warehouse operators often assumed that any crop, seed, or spice originating from a farm was exempt from GST during cold storage, regardless of processing.
What has changed
The authority ruled that storage for basic, unprocessed crops in Group A is exempt from GST because cleaning and dust removal are normal farm-level operations. However, commodities in Groups B through G that undergo specialized processes like polishing, dehusking, splitting, or machine shelling lose their status as agricultural produce, so cold storage services for them attract full GST.
Who this affects
Cold storage owners, warehouse operators, and traders dealing in stored agricultural crops, seeds, spices, and nuts.
An example
A warehouse in Jaipur provides cold storage for raw cumin seeds and polished split pulse products. Under the logic of Order RAJ/AAR/2018-19/03, storage fees for raw cumin seeds are exempt from GST because they only undergo basic cleaning. However, the warehouse must charge GST on storage fees for the polished split pulses because polishing and splitting alter the crop beyond basic farm operations.
What you should do
Review the items stored in your facility to check if they undergo processing beyond basic farm cleaning before entering storage. An advance ruling binds only the business that applied for it, so other cold storage providers should consult a tax professional or apply for their own ruling before changing tax treatments.
If you do nothing
If you stop charging GST on storage services for processed crops, tax officers may treat those services as taxable during an audit. You could be required to pay the uncollected GST out of pocket along with statutory interest and non-compliance penalties.
The terms explained
- agricultural produce
- Raw produce from cultivation that has undergone no processing, or only basic processing usually done by a farmer to make it ready for the primary market.
- advance ruling
- An official tax decision issued by authorities to a specific business answering how tax laws apply to their stated situation.
- primary market
- The initial marketplace where farmers sell their raw, unprocessed crops directly to buyers.
The ruling in detail
Authority for Advance Ruling
M/s Sardar Mal Cold Storage & Ice Factory
RAJ/AAR/2018-19/03 dated 11.06.2018 · Rajasthan
Questions before the authority
- Whether the goods as mentioned in Group A to Group G of Annexure A which comes for storage will come under the definition of agricultural produce or not & whether the supply of Cold Storage services by the applicant firm to the goods as mentioned above attracts Nil rate of duty or not as per Notification No. 11/2017 Central tax (Rate) dated 28/06/2017 and Notification No. 12/2017 -Central Tax (Rate) dated 28/06/2017.
Facts
The applicant operates a cold storage facility providing storage and warehousing services for various agricultural goods listed in Groups A to G, including seeds, spices, dried fruits, nuts, and herbal products. The goods are brought to cold storage either by farmers or traders after varying levels of cleaning, drying, polishing, shelling, or dehusking. The applicant sought an advance ruling to determine whether these commodities qualify as agricultural produce to avail GST exemption on cold storage services under Notification No. 11/2017-CT(R) and Notification No. 12/2017-CT(R).
Ruling
| Question | What the authority ruled |
|---|---|
| Taxability of cold storage services for commodities under Group A (spices and seeds like Fennel, Coriander, Cumin, Mustard, etc.) | Exempt from GST Exempt provided processing is usually done by a cultivator or producer at farm level; if specialized machine processing outside farm level is done, it becomes chargeable. |
| Taxability of cold storage services for commodities under Group B to Group G (Turmeric, Dried Ginger, Dates, Tamarind, Dry Mango, Cinnamon, Shelled Groundnuts, Coconut, Dry Fruits, etc.) | Chargeable to GST These goods undergo specialized processing, value addition, or dehusking/shelling beyond primary marketability and fail the definition of agricultural produce. |
The Authority held that goods listed under Group A qualify as agricultural produce, making supply of cold storage services for them **exempt from GST**, provided processing is limited to operations usually done by a cultivator at the farm level. Goods listed under Group B to Group G undergo specialized processing or value addition beyond primary marketability and do not qualify as agricultural produce; hence, cold storage services for Group B to G goods **remain chargeable to GST**.
Reasoning
Under Entry 24 of Notification No. 11/2017-CT(R) and Entry 54 of Notification No. 12/2017-CT(R), agricultural produce is defined as produce out of cultivation where no further processing is done, or such processing is done as is usually done by a cultivator that does not alter its essential characteristics but makes it marketable for the primary market. Group A commodities undergo basic cleaning and dust removal that retains essential character and primary marketability. In contrast, commodities in Groups B to G undergo processes like polishing, dehusking, splitting, machine shelling, or drying by skilled labor or secondary market processors, resulting in substantial value addition and altering primary market status.
Provisions relied on
- Notification No. 11/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 24)
- Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (Entry No. 54)
- Circular No. 16/16/2017-GST dated 15-11-2017
- Section 97(2) of the CGST / SGST Act, 2017
For the practitioner
This ruling clarifies the precise boundaries of **agricultural produce** for GST exemption on cold storage and warehousing services. Cold storage of whole, unrefined seeds and spices (Group A) remains exempt, whereas storage of processed, shelled, polished, or secondary-market commodities (Groups B through G) attracts full GST.
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/raj.03.2018-19_dtd_11.06.18-smcs_if.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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