GST officers working on registration mechanism for ‘shared warehouse’ for e-commerce suppliers

GST authorities are currently devising a system to address taxation and registration challenges associated with shared warehouses utilized by e-commerce suppliers, according to an official. The complexity arises from multiple suppliers listing the same warehouse as an ‘additional place of business’ in their Goods and Services Tax (GST) registrations.

In accordance with GST regulations, suppliers can store their goods in a common warehouse linked to an e-commerce platform. However, each supplier is obligated to declare the warehouse as an additional business location in their GST registration.

The official highlighted that when numerous taxpayers register at a shared warehouse, the geo-tagging system identifies the same address for all, potentially raising concerns of fraudulent registrations.

Another concern is that the shared warehouse should not be penalized for the actions of individual suppliers. Moreover, there’s a risk that tax authorities might attribute liabilities to the e-commerce operators themselves, potentially impacting their operations.

The matter of warehouse registration for e-commerce firms was deliberated between Central and state GST officers during a recent meeting.

“This issue is currently under discussion. The concept of shared workplaces for e-commerce warehouses will be explored by the law committee and subsequently presented to the GST Council,” the official stated.

The law committee, comprising both central and state tax officers, is tasked with addressing such matters within the GST framework.

An expert noted that the rise of e-commerce has led to the emergence of shared warehouses accommodating numerous suppliers, some housing thousands of them.

Recently, GST authorities introduced geo-tagging, requiring taxpayers to provide precise location data for all registered premises. This enables tax officials to pinpoint the exact locations of registered taxpayers.

“Instances where multiple taxpayers share the same address could result in undue scrutiny for both the taxpayers and the companies managing these warehouses. This presents a significant challenge that requires industry-wide resolution,” the expert remarked.

The expert suggested that GST authorities should explore implementing a mechanism to distinctly identify warehouses and educate tax systems to differentiate between the tax liabilities of these facilities and those of the suppliers registered therein.

“A more refined tax system should allow for distinct geo-tags representing warehouses and individual taxpayers, enabling more accurate risk assessments by tax authorities and reducing unwarranted scrutiny,” the expert concluded.