In a key clarification impacting businesses operating across multiple states, the Central Board of Indirect Taxes and Customs (CBIC) has stated that an importer whose head office is located in one state but maintains a warehouse or storage facility in another must obtain separate Goods and Services Tax (GST) registration in that state as well.
Responding to a representation from the Kirana Committee of Delhi, the CBIC explained that the definition of “place of business” under Section 2(85) of the Central GST (CGST) Act, 2017, explicitly includes any location from which business operations are ordinarily carried out — such as warehouses, godowns, or storage facilities.
Separate Registration Required When Goods Supplied from Another State
The clarification addresses a common query among traders and importers — whether businesses with their principal place of business in one state (for instance, Delhi) are required to register under GST in another state (say, Haryana) if they store goods in third-party cold storage or warehouse facilities there and make supplies directly from those locations.
“The law is clear that every person making taxable supplies from a particular state is liable to be registered in that state, provided the aggregate turnover exceeds the prescribed threshold,” CBIC said in its communication.
If goods are stored in a Haryana warehouse and subsequently dispatched to customers from that location, the warehouse qualifies as a place of business for GST purposes. Therefore, the business entity must register in Haryana, even if the storage facility is managed by a third party.
Third-Party Warehouses Don’t Exempt Businesses from Registration
The Board emphasized that the fact that a warehouse or cold storage is operated by a third-party service provider does not change the legal requirement. If supplies originate from such premises, GST registration in that state is mandatory.
Establishments of the same company under a single Permanent Account Number (PAN) but in different states are treated as distinct taxable persons under GST. Consequently, the movement of goods from the principal place of business (e.g., Delhi) to the warehouse (e.g., Haryana) must be supported by a valid tax invoice and an e-way bill, and the applicable GST must be paid accordingly.
Classification of Supplies and Tax Implications
Under the GST framework, the place of supply of goods is the location where the movement of goods terminates for delivery. Thus:
- Any movement of goods within the same state where the warehouse is situated will be treated as an intra-state supply, attracting CGST and SGST.
- Supplies to another state will qualify as inter-state supplies, attracting IGST.
In addition, services such as cold storage will be treated as services related to immovable property. Accordingly, the place of supply for such services will be the location of the cold storage facility itself — meaning that the relevant state’s CGST and SGST will apply to those transactions.
Compliance and Operational Implications for Businesses
Tax experts believe the clarification will significantly increase compliance obligations for businesses using third-party logistics or warehousing services.
According to Harpreet Singh, Partner at Deloitte, while earlier FAQs and certain advance rulings had indicated that storing goods in third-party warehouses did not constitute a fixed establishment or place of business, the CBIC’s latest stance suggests a more stringent interpretation.
“This clarification means that businesses will now have to undertake additional compliance such as maintaining separate stock records, issuing tax invoices and e-way bills for inter-state transfers, and filing independent GST returns for each state registration,” Singh explained.
He added that companies may need to revisit their supply chain and warehousing strategies, possibly relocating storage facilities or renegotiating third-party logistics contracts to reduce registration exposure and compliance costs.
Key Takeaway
The CBIC’s clarification underscores a strict interpretation of place of business under GST law. Businesses operating warehouses, cold storages, or fulfillment centers outside their home state — even through third-party arrangements — must secure state-specific GST registration wherever supplies originate, ensuring compliance with inter-state tax norms and documentation requirements.
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