GST Exemption on Godown Rent for Paddy Storage Confirmed by Tamil Nadu AAR

Advance Ruling Exempts Paddy Storage Rent from GST, Citing Agricultural Produce Classification

In a significant decision, the Tamil Nadu Authority for Advance Ruling (AAR) has clarified that rent received for a godown used specifically for the storage of paddy is exempt from Goods and Services Tax (GST). The ruling was issued in response to an application filed by Mr. Lakshmanan Sivalingam, proprietor of Lena Modern Rice Mill, seeking clarity on the tax implications of renting out his facility for paddy storage.

The ruling, dated November 17, 2025, came after an analysis of the relevant statutory provisions and notifications under the Central Goods and Services Tax Act, 2017. The AAR bench, comprising Shri C.Thiyagarajan and Shri B.Suseel Kumar, concluded that paddy qualifies as 'agricultural produce,' thereby making its storage service exempt from GST under Notification No. 12/2017-CT (Rate) dated June 28, 2017.

The applicant, Mr. Sivalingam, had rented out his godown to a tenant for the storage of paddy. The tenant, however, contested the payment of GST on the rent, leading the applicant to seek an advance ruling. Despite the absence of the rental agreement and bills, the AAR proceeded to evaluate the application based on the facts presented.

The ruling referenced both Notification No. 11/2017 and Notification No. 12/2017, which categorize services related to agricultural produce as exempt from GST. The AAR highlighted that paddy, in its raw, unprocessed state, is considered agricultural produce, satisfying the criteria outlined in the notifications. These include being a product of cultivation that has undergone minimal processing, typically by the cultivator, without altering its essential characteristics.

The decision reinforces the GST Act's provisions that aim to support agricultural activities by exempting them from additional tax burdens. This ruling is expected to provide relief to other businesses involved in similar activities and seeking clarity on GST applicability.

Bottom Line:

GST - Rent received for Godown used for storage of Paddy is exempt from GST as per Notification No. 12/2017-CT (Rate) dated 28.06.2017, as storage of Paddy qualifies as service related to agricultural produce.

Statutory provision(s): Central Goods and Services Tax Act, 2017, Section 97; Notification No. 12/2017-CT (Rate) dated 28.06.2017, Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Lakshmanan Sivalingam, (AAR)(Tamil Nadu) : Law Finder Doc Id # 2818973