The Authority for Advance Ruling (AAR), Tamil Nadu, stated that no GST is to be imposed on rent received for a godown used exclusively for the storage of paddy. Under the related GST exemption notifications, the ruling categorised paddy as ‘agricultural produce’.
The applicant, M/s. Lena Modern Rice Mill, a rice mill proprietor in Tamil Nadu, had leased the premises, including a godown and a machinery area, to a tenant. The godown portion was intended to be used by the tenant for the storage of paddy.
The applicant approached the AAR after the tenant declined to pay GST on the rent for the godown, prompting a dispute over the taxability of the lease income. The applicant desired an advance ruling u/s 97 of the CGST/TNGST Act, 2017, to specify whether GST was subject to be paid on the rent for the godown used for storing paddy.
The Authority, including C. Thiyagarajan (Member, CGST) and B. Suseel Kumar (Member, SGST), referred to Sl. No. 54(e) of Notification No. 12/2017-CT (Rate), dated 28.06.2017, which provides for a ‘Nil’ rate of GST on:
“Services relating to cultivation of plants and rearing of all life forms of animals… or agricultural produce by way of (e) loading, unloading, packing, storage or warehousing of agricultural produce”
To find if Paddy comes under the definition of “agricultural produce” as defined in the notification is the main issue. AAR noted that ‘agricultural produce’ signifies any produce from cultivation upon which either no further processing is done, or such processing is done that:
- Does not change its fundamental characteristics
- Makes it marketable for the primary market
- Usually taken out by a cultivator or producer
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The AAR differentiated between Paddy and Rice. Paddy is the raw, harvested grain still in its husk, a direct product of cultivation. While it may undergo minimal processing (like dehusking) before being sold, this process does not fundamentally change its nature but merely makes it marketable. The Authority concluded that paddy meets all the conditions to be classified as ‘agricultural produce.’
The authority said that the rice (the processed, milled grain) is usually considered outside this meaning, but the storage in question was exclusively for paddy.
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The Tamil Nadu AAR from the analysis ruled that as paddy was entitled as ‘agricultural produce,’ the service of storage or warehousing of paddy attracts a Nil rate of GST under the exemption entry.
| Case Title | M/s. Lena Modern Rice Mill |
| Advance Ruling No. | 47/AAR/2025 |
| GSTIN | 33AARPS0595F1ZD |
| Tamil Nadu AAR | Read Order |
