An importer with its head office in one state but warehouse in another state will have to take GST registration there too, Central Board of Indirect Taxes and Customs (CBIC) has said.
“The term ‘place of business’ as defined under Section 2(85), includes any location from where business is ordinarily carried out, including warehouses and storage facilities,” CBIC said in a recent communication while responding to a representation by the Kirana Committee of Delhi. The primary concern pertains to whether a business entity whose principal place of business is in Delhi is required to obtain GST registration in Haryana, where goods are stored in cold storage facilities operated by third parties from which the goods are supplied to recipients.
ln this regard, “it is reiterated that under Section 22 of the CGST Act, 2017, every person making taxable supplies from a State is liable to be registered in that State, provided the aggregate turnover exceeds the prescribed threshold,” the board said. Further, where goods are stored in Haryana and subsequently, dispatched to customers from such facilities, the warehouse effectively functions as a place of business for the purpose of making outward taxable supplies.
“The fact that the cold storage is operated by a third party does not alter the legal position if the supply originates from that location. Therefore, in such cases, the business entity is required to obtain GST registration in Haryana, and all provisions of the CGST Act shall apply mutatis mutandis to such supplies made from the State of Haryana, the board clarified.
It also said that as establishments of the same PAN in different states are treated as distinct taxable persons, the warehouse shall become a distinct place of business. Thus, any movement of goods from the principal state to such warehouse must be accompanied by a valid tax invoice and e-way bill, and GST shall be discharged appropriately. Since place of supply of goods is the location where the movement of goods terminates for delivery, any movement of goods within the same State where the warehouse is located will be treated as intra-state supply, attracting CGST & SGST. Supplies to other States shall be treated as inter-state supply and shall attract IGST, the communication explained.
Also, cold storage services shall be regarded as services related to immovable property and accordingly, the place of supply of services shall be the location of the third-party cold storage facilities, meaning CGST and SGST of the state where the warehouse is located, will apply.
According to an tax expert, while in one of the FAQ issued by CBIC and certain advance rulings it was held that storing goods in third-party warehouses will not qualify as fixed establishment/ place of business, this circular implies increased compliance responsibilities, including maintaining separate stock registers, issuing tax invoices and e-way bills for inter-State movements, and filing separate GST returns for each registration. “Companies may also need to reassess their logistics and warehousing strategies, potentially relocating storage or renegotiating third-party agreements to optimise registration exposure” he advised.
