Spice, dry fruit importers facing GST heat; is the last warehouse an additional place of business, the authorities say Yes according to law; hence the tax

50 importers of spices, dry fruits, processed food and poultry over storage of products at warehouses different from the actual place of supply have been served notices by GST authorities asking for additional tax payment of about Rs 1000 crore said people with the knowledge of the development.

In some cases, the authorities have also warned the importers of cancellation of registration, they said.

.Citing GST law that requires registration of place of supply  Tax authorities want importers to register these temporary storage warehouses under GST

Importers claim that they need a warehouse near the port or place of final supply for perishables and that the final place of supply was registered. They say the authorities’ demand would unnecessarily increase compliance burden. All imports are treated as inter-state supplies for the purposes of levy of GST.

Integrated GST (IGST) is levied on imports in addition to other customs duties. An importer can avail input tax credit of IGST paid and utilise the same or claim refund in accordance with the provisions of the Central GST Act, 2017.

“A large number of importers, mostly MSMEs (micro, small and medium enterprises), are facing this issue as the law demands that the address on the bill of delivery and bill of supply should be identical for claiming input tax credit, which is not practical,” an importer of spices said on condition of anonymity. For example, he said, if a Delhibased trader imports goods via a port in Gujarat and then supplies to retailers in Maharashtra, the trader would typically store the goods in a warehouse close to the port or in Maharashtra.

The bill would be generated using the trader’s Delhi address. However, as per the authorities, the trader cannot claim input tax credit and must get registration in the state for the warehouse from where the supply is made.

Tax authorities now want traders to pay additional IGST in such cases, treating the warehouse as an additional place of business. “The moot point is whether such a warehouse becomes an additional place of business, as the provisions require registration from where the supplies happen,” said Abhishek A Rastogi, founder, Rastogi Chambers.