The GST-Authority for Advance Rulings, Andhra Pradesh, in the case of Sri Vinayaka Hatcheries has held that renting of land for the purpose of fish farming is not exempt from goods and services tax (GST).
In this case, the AAR bench examined the lease agreement and observed that: Nowhere it is mentioned specifically that the land is leased for any purpose related to agriculture, rearing of animals, fishing etc. The agreement between the lessor and the lessee (applicant) is executed in the lines of commercial renting of any other land without any reference to the purpose of usage of the land. It is open ended that the land might be used by the lessee for any other intended purpose in the absence of any specification as such.
The applicant entity had submitted that rearing is carried out in respect of fish and prawns. The wet-land is procured on annual lease. It referred to notification dated June 28, 2017 – whereby under heading 9986, ‘Services relating to rearing of all life forms of animals, by way of rentinq of vacant land with or without a structure incidental to its use are exempted from GST.’
The AAR bench observed that fish farming is not covered under services to agriculture as per this notification. Further, taking into consideration the terms of the lease agreement, it rejected the submissions of the applicant entity.
Renting of land for fish farming would be subject to GST at 18% ruled the AAR.
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