GST authorities are developing a framework to address taxation and registration concerns pertaining to shared warehouses operated by e-commerce firms, an official said. These warehouses serve as storage spaces for goods from multiple suppliers, thereby presenting unique challenges for taxation and registration.

The taxation quandary concerning warehouses has surfaced due to multiple suppliers geo-tagging the same warehouse as their ‘additional place of business’ under Goods and Services Tax (GST) regulations.

The official stated, “We are exploring the feasibility of implementing a ‘shared workplace’ or ‘coworking space’ concept for warehouses managed by e-commerce companies, where goods from multiple suppliers are stored.”

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According to Goods and Services Tax (GST) regulations, suppliers to an e-commerce platform can store their goods at a shared warehouse. Nevertheless, these suppliers are mandated to include the warehouse as an additional place of business in their GST registration.

The official explained that when multiple taxpayers register at a single warehouse, the geo-tag displays the same address for all. This alerts tax officers to the possibility of fraudulent registration, as it suggests numerous taxpayers operating from a single location.

Another concern is that the warehouse, where multiple suppliers store their goods, should not bear responsibility for the default of a single supplier. Furthermore, the official added, there is a risk that tax officers could link such liabilities to the e-commerce operators themselves, potentially impacting their businesses.

Earlier this month, Central and state GST officers convened to discuss the registration of warehouses managed by e-commerce companies.

“The concept is currently under discussion. The feasibility of implementing a shared workplace model for e-commerce warehouses will be deliberated upon by the law committee, and subsequently presented to the GST Council,” stated the official.

The law committee within the GST Council consists of officers from both central and state tax departments.

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Rajat Mohan, Executive Director at Moore Singhi, noted that the evolution of e-commerce has compelled numerous companies to operate shared warehouses, catering to multiple suppliers, with some facilities accommodating thousands of suppliers.

Recently, GST authorities introduced geo-tagging, mandating taxpayers to furnish geo-tags for all registered premises. This enables tax officers to precisely locate the registered taxpayers’ premises.

Mohan emphasized that a situation where multiple taxpayers share the same address could result in unwarranted scrutiny for both the taxpayers and the companies overseeing these warehouses. This poses a substantial challenge that requires resolution at the industry level.

He suggested that GST authorities ought to contemplate establishing a mechanism to distinguish warehouses separately and train tax systems to prevent merging the tax payment record of these facilities with those of the registered suppliers therein.

Mohan added that an enhanced tax system should allow geotags to clearly distinguish between warehouses and individual taxpayers. This distinction would enable tax officers to conduct more precise risk assessments and reduce undue harassment.