Query Regarding Addition of Temporary Cold Storage Space to GST Registration, Goods and Services Tax - GST

[Sandeep Anand]

Dear Sir,

We are a food manufacturing company currently in the process of planning to rent a cold storage space for a period of one month. While the purpose of renting this temporary cold storage space is to accommodate our immediate storage needs, we are uncertain about the necessity of adding it to our existing GST registration for the said duration.

Considering the short-term nature of our requirement, we seek your expert advice on whether it is essential to include the temporary cold storage space in our existing GST registration. We want to ensure that we comply with all relevant tax regulations while avoiding any unnecessary administrative complexities.

We greatly value your expertise and guidance in tax matters, and we trust that your professional advice will enable us to make an informed decision regarding our GST registration

Sandeep V Anand.

Posts / Replies

[Amit Agrawal]

One needs to declare 'additional place of business' while taking its GST registration or seeking amendment to existing registration when such additional place got added after getting registration. This is applicable when taxpayer does not want to take separate registration under GST for such additional place under proviso to Section 25 (2).

As per Section 2 (85), “place of business” includes––

(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or

(b) a place where a taxable person maintains his books of account; or

(c) a place where a taxable person is engaged in business through an agent, by whatever name called;

In my view, place of business (as denied above) a place from where the business is ordinarily carried on and the defined characteristic (i.e. ordinarily) is applicable even for 'any other place where a taxable person stores his goods'.

As per your query, the purpose of renting this temporary cold storage space is to accommodate our immediate storage needs. So, this is not a place when you ordinarily store your goods and hence, it is not your 'place of business' and same need not be added in your current registration.

However, if continue to rent this place of storage beyond current / first one month (by extending rent period from time to time), it will be difficult to argue that same is not your place of business. And hence, in case of extension of rental period, amendment of existing registration will be required (with the understanding that you do not want separate registration).

However, please note that except avoiding making application for amendment, you need to follow all other procedures prescribed under law while storing goods at this temporary facility (For example: preparing delivery-challan u/r 55 & E-way bill for movement of your goods from / to such storage place etc.)

Lastly, on the practical side, while law does not require you to seek amendment at this stage and it is also understandable that you do not want any unnecessary administrative complexities, if Dept. raises dispute on any issue whatever on however faulty grounds (For example: initiation of proceedings to confiscate goods during movement, or proceedings to confiscate goods stored in such temporary storage place etc.), time, money & efforts to defend your position (though perfectly correct in law & fully defendable) will be far more cumbersome, painful and cost consuming. But, efforts to apply seeking amendment for adding additional place of business & its subsequent deletion (if rental is not continued) from GST registration is very routine and not complex.

So, it is finally your call though I can say that law is on your side if you do not seek amendment at this stage.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Addition of 'Additional place of business' by way of amendment in the existing GST registration is the only solution, if you do not want separate new registration for the purpose mentioned by you. .

You cannot obtain temporary registration also.

[KASTURI SETHI]

Sh.Sandeep Anand Ji,

In continuation of my reply dated 9.6.2023 above, I further clarify as under :

(i) In terms of Rule 16 (1) of CGST Rules, Proper Officer can issue, suo moto, temporary registration but that is consequent upon initiation of proceedings i.e. enquiry, investigation etc. Hence such temporary registration is not in fitness of things.

"RULE 16. Suo motu registration. — (1) Where, pursuant to any survey, enquiry, inspection, search or any other proceedings under the Act, the proper officer finds that a person liable to registration under the Act has failed to apply for such registration, such officer may register the said person on a temporary basis and issue an order in FORM GST REG-12* "

(ii) You also do not qualify for temporary registration under the category of 'casual taxable person' because you have fixed place of business.

"Section 2 (20) of CGST Act “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business."

[Sandeep Anand]

Dear All,

Your thorough explanation was helpful and provided us with the information we needed to better understand the matter at hand. Thank you for taking the time to provide such a comprehensive response.

Regards,

Sandeep

[Rajagopalan Ranganathan]

Sir,

As per the list of documents to be enclosed with the application FORM REG-1 for registration purpose, no mention has been made regarding enclosing the list of machinery erected in the factory. Hence, in my opinion, you need not amend your registration application by including temporary cold storage space

[Padmanathan Kollengode]

Adding to views of experts,

pls take a note of Rule 56(5) & (6)

(5) Every registered person shall keep the particulars of -

(a) names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under the Act;

(b) names and complete addresses of the persons to whom he has supplied goods or services, where required under the provisions of this Chapter;

(c) the complete address of the premises where goods are stored by him, including goods stored during transit along with the particulars of the stock stored therein.

(6) If any taxable goods are found to be stored at any place(s) other than those declared under sub-rule (5) without the cover of any valid documents, the proper officer shall determine the amount of tax payable on such goods as if such goods have been supplied by the registered person.

Thus, As explained by Ld Friend Amit Ji, since it is not additional place of business, Rule 56(5) requires only maintenance of particulars of complete address where such goods are stored by him.

Interestingly, sub-section (6) states about "declared as per sub-section (5)" whereas sub-section (5) says only "keep particulars of".

Hence, in my view, if particulars are kept as per sub-section (5) clause (c), and is covered by valid documents such as Delivery challan, e-way bill for movement etc., it should be the end of the matter.

Practically you should take a call whether to add or not

[KASTURI SETHI]

Dear Sh.Padmanathan Kollengode Ji,

Thanks a lot for throw more light on the issue.

Now if we talk of degree of safety and shut the doors for any type of problem in this context, the safest way is to declare the additional place of business in the application for registration by way of amendment in the core field. Every assessee wants to be safest from all possibilities of risks.

[KASTURI SETHI]

Dear Sh.Padmanathan Kollengode Ji,

Just for enrichment of my knowledge, please reply (not answer) to the following two questions :-

(i) What are the 'side effects' of declaring 'cold storage' as additional place of business ?

(ii) What are the side effects of adopting 'safest' method instead of 'safe one ' ?

[Padmanathan Kollengode]

Ld Kasturi sir,

I just brought out the relevant provision sir. Best way is the "safest way".

Practically, I had a problem in similar issue some time back.

The cold storage unit had issued only an invoice and there was no rent-lease agreement. When additional place was added by amending the registration, the officer issued query asking for rent agreement, building tax receipt etc.

In our replies, we did submit that it was a cold storage for temporary purpose. But the officer was not able to appreciate it and amendment was rejected.

[Padmanathan Kollengode]

Kasturi sir,

since the querist wants to avoid "unnecessary administrative complexities", I just gave an option since he has to amend registration once to add, then again to remove after a month, answer queries (if any) in between etc.

Like you said, the safest route is adding additional place of business.

[KASTURI SETHI]

Dear Sh.Padmanathan Kollengode Ji,

I realize your outpourings regarding gross injustice was done with your client on this very issue. Normally amendment regarding adding additional place of business is not rejected. However, it varies from officer to officer.