E-commerce companies are seeking clarity from tax authorities on the registration process under the Goods and Services Tax (GST) regime for suppliers, as dark stores are rapidly proliferating as part of quick commerce strategies.
Dark stores are typically large warehouses that are used by e-commerce and FMCG companies as fulfillment centers where suppliers store goods. Warehouses are typically rented by e-commerce companies, where their supply partners store goods and supply them to end consumers who place orders via mobile apps or websites.
Most of these suppliers do not have rental agreements with e-commerce companies or warehouse owners and therefore face procedural issues in registering these dark stores as additional establishments under their respective GST registrations. This often happens.
Dark stores are increasingly opening as businesses look to deliver groceries and other goods within minutes, while the CBIC has also tightened GST registration procedures as part of its efforts to curb fake registrations.
According to people involved, this is seen as an issue that could become a point of conflict for the operation of underground stores.
To register additional establishments, GST-registered entities must register on the GST portal and provide documents such as rental agreements and electricity bills as proof of address and other documents such as licenses and photographs of the additional establishments. Must be submitted along with the documents.
The issue is understood to be under discussion with the GST authorities and with representatives of the trading industry. The matter may also be investigated by the Central Board of Indirect Taxes and Customs.
In a bid to curb the issue of fake registrations and tax evasion, the GST authorities have over the past year tightened the registration criteria for companies to combat tax evasion.
