Paddy Is An Agricultural Produce, No GST Leviable On Rent Received For Its Storage: Tamil Nadu AAR
The Tamil Nadu Authority for Advance Ruling (AAR) has ruled that rent received for letting out a godown to store paddy does not attract Goods and Services Tax (GST), as paddy qualifies as an agricultural produce. The ruling was passed on an advance ruling application filed by M/s Lena Modern Rice Mill, owned by Lakshmanan Sivalingam, which had rented out its premises for use as...
The Tamil Nadu Authority for Advance Ruling (AAR) has ruled that rent received for letting out a godown to store paddy does not attract Goods and Services Tax (GST), as paddy qualifies as an agricultural produce.
The ruling was passed on an advance ruling application filed by M/s Lena Modern Rice Mill, owned by Lakshmanan Sivalingam, which had rented out its premises for use as a godown to store paddy. The tenant had refused to pay GST on the rent, prompting the applicant to seek clarity on whether GST was payable on such rental income.
According to the applicant, the premises included a rice mill, warehouse, and storage area, and the godown portion was specifically used for storing paddy. The applicant claimed that storage of agricultural produce is exempt from GST under the relevant exemption notifications and therefore rent received for such use should not be taxed.
It was observed that any produce out of cultivation of plants on which either no further processing is done or such processing is done as usually done by a cultivator or producer without altering the essential characteristics but makes the product marketable for the primary market would be termed as an 'agricultural produce'.
The Tamil Nadu AAR bench observed that paddy is rice in its raw and unprocessed form, harvested from the rice plant and still covered with husk. Any basic processing done, such as removal of husk by the cultivator, does not change its essential character and only makes it fit for sale in the primary market.
On this basis, the AAR held that paddy clearly falls within the definition of agricultural produce. It further noted that services related to storage or warehousing of agricultural produce are taxed at a nil rate under GST. Since the godown was rented out solely for storage of paddy, the rent received could not be subjected to GST.
The Bench, comprising C. Thiyagarajan and B. Suseel Kumar, therefore ruled that no GST is payable on rent earned from letting out a godown used for storage of paddy.
Dated: 17.11.2025 (Tamil Nadu AAR)