GST dept developing registration system for shared warehouse for e-commerce

The issue of taxation for warehouses has cropped up after multiple suppliers have geo-tagged the same warehouse as their 'additional place of business' under the GST rules

GST authorities are working out a mechanism to deal with the taxation and registration issues related to shared warehouses maintained by e-commerce companies, where multiple suppliers store their goods for the last mile delivery, an official said.

The issue of taxation for warehouses has cropped up after multiple suppliers have geo-tagged the same warehouse as their 'additional place of business' under the Goods and Services Tax (GST) rules.

"We are working to see whether a 'shared workplace' or 'coworking space' concept can be implemented for the warehouses maintained by e-commerce companies to store goods of multiple suppliers," the official told PTI.

Under Goods and Services Tax (GST) law, suppliers to an e-commerce platform can store their goods at a common warehouse. However, the suppliers in their GST registration are required to show the warehouse as an additional place of business.

The official said that when multiple taxpayers register at a single warehouse, the geo-tag reflects the same address for all. This sends a signal to the tax officer that numerous taxpayers are based at one location and this might be a possible fraudulent registration.

The other issue is that the warehouse where multiple suppliers store their goods should not be held accountable for the default of a single supplier. Additionally, there is a risk that tax officers might attribute such risks to the e-commerce operators themselves, potentially affecting their businesses, the official added.

The issue of registration of warehouses maintained by e-commerce companies was discussed between the Central and state GST officers at a meeting earlier this month.

"It is currently in the phase of discussion. Whether a shared workplace concept can be implemented for e-commerce warehouses would be discussed at the law committee and then presented before the GST Council," the official said.

The law committee under the GST Council comprises officers from central and state taxes.

Moore Singhi Executive Director Rajat Mohan said the evolution of e-commerce has necessitated many companies to maintain shared warehouses for multiple suppliers, with some facilities accommodating thousands of suppliers.

GST authorities have recently implemented geo-tagging, requiring taxpayers to provide geo-tags for all registered premises. This allows tax officers to pinpoint the exact locations of registered taxpayers.

"A scenario of multiple taxpayers showing the same address can lead to undue scrutiny for both the taxpayers operating within these warehouses and the companies managing them. It presents a significant challenge that warrants resolution at the industry level," Mohan said.

He said GST authorities should consider implementing a mechanism to separately identify warehouses and train tax systems to avoid conflating the tax payment score of these facilities with those of the suppliers registered there.

"A refined tax system should enable geotags to distinctly represent warehouses and individual taxpayers, facilitating more accurate risk assessments by tax officers and minimising unwarranted harassment," Mohan added.