15.05.2024: E-commerce firms seek clarity on registration under GST regime

With the rapid sprouting up of dark stores as part of their quick commerce strategies, e-commerce companies are seeking clarity from tax authorities for the registration process under the goods and services tax (GST) regime for their suppliers.

A dark store typically is a large warehouse and is used by e-commerce and FMCG firms as a fulfilment centre where their suppliers store goods. The warehouse is generally taken on rent by the e-commerce company and their supplying partner stores goods there, which are then supplied to the end consumers who order it via their mobile app or the website.

Most of these suppliers do not enter into a rental agreement with the e-commerce firm or warehouse owner and then often face procedural problems in registering these dark stores as an additional place of business under their respective GST registrations.

While more and more dark stores are now being set up as companies look to deliver groceries and other items in a matter of minutes, the CBIC has also tightened the procedures for GST registrations as part of its efforts to curb fake registrations.

According to sources, this is being seen as an issue that could turn into a point of conflict in the management of dark stores.

To register an additional place of business, GST registered entities have to register on the GST portal and provide documents such as rent agreement or electricity bill as proof of address, along with other documents such as authorisation letter and photos of the additional place of business.

The issue is understood to be under discussion with trade and industry representatives also taking it up with GST authorities. The matter may also be examined by the Central Board of Indirect Taxes and Customs.

To curb the problem of fake registrations and evasion of taxes, GST officials have over the last one year tightened norms for registration of businesses to combat tax evasion.

Source: Business today

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