In today’s era, Warehousing Services under 3PL Arrangements play an important role in Supply Chain Management. For the growth of a business, Business Models like C&F on Commission basis or franchise based model of business are already in practice. However, to keep the trade secrets controlled at Owners’ desk, 3PL based Warehousing Arrangements are coming into practice as a Modern way for the expansion of business and management of logistics/supply chain.
To expand the wings of the business to new regions, 3PL arrangements play a strategic role by providing required space, infrastructure, labour, transportation and management of inventories. Further, such arrangements provide the assistance over regional language barriers. The variable nature of charges helps to reduce Fixed Overheads to a greater extent.
Such Warehousing services, generally includes, storage of goods under the authority/supervision and control of 3PL Warehouse Operator. It may also include, inward and outward loading/unloading, packing, repacking, inventory management, etc. in respect of goods. All such activities are conducted by warehouse operator only. Warehouse Operator keep the goods under his custody in the capacity of Custodian.
In this article, we will go through the legal provisions under GST laws applicable for Businesses entering such arrangements.
Provisions to be followed by 3PL Service Providers
Registration :- The service providers should be registered under GST for each and every Place/WH which are actively engaged in providing Warehousing services to the clients.
Display Board :- There should be a Display Board at the Warehouse for the Name, Address and GSTIN of service provider as well as of clients at all times.
Management of Inventory :- Inventory should be managed in such manner that it should be easily identifiable on Client level as well as on item level.
Records to be maintained :- Service Providers shall maintain the books of accounts with respect to the following information :-
- The detail of clients on Warehouse Level.
- Period for which particular goods remain in the warehouse on client level and item level.
- Particulars relating to dispatch, movement, receipt and disposal of such goods on client level and item level with quantity and full description of goods.
- Documents pertaining to inwards, outwards, disposals, movements, etc.
- Details of Regular Audits being performed
Assistance to GST Officers for Inspection :- As and when required, service providers shall facilitate any physical verification or inspection by the GST Officer on demand.
Invoice for Warehousing Services to clients :- Invoice for Warehousing services should be given from the GSTIN of Concerned Warehousing State/UT only. While Invoicing, following components should be taken care of :-
SAC Code to be used : 996729 (Other storage and warehousing services)
GST Rate : 18% (CGST 9% + SGST 9%)
Place of Supply : Same State/UT where the Warehouse is located
Provisions to be followed by Users of Warehousing Services
Registration :- This is the very first thing to get the Warehouse Address registered under GST Laws either as Principal Place of Business or as an Additional Place of Business. If a person is already registered in a State/UT and he is going to avail the warehousing services in the same state/UT, he is required to get the registration of said new place as Additional Place of Business. However, if such person is not registered in State/UT where the warehouse is located, he is required to apply for fresh registration under GST laws applicable in that State/UT.
Display Board :- There should be a Display Board at the Warehouse for the Name, Address and GSTIN at all times.
Transfer of Material from One State to Another State :- While transferring Material from One State to Another State, the material shall be supported by Tax Invoice along with E-way Bills.. Even if, both the entities are owned by same person, still, Tax Invoice is required. Under GST laws, both the entities are considered as different entities for the purpose of levy of GST.
Bill for Warehousing Services :- It is always to be ensured that the bill for warehousing services should be taken in same state where the Warehouse is located. The Place of Supply for said services is always considered as same state/UT where the warehouse is located. So, in case, Bill for warehousing services taken at the GSTIN other than the GSTIN of Warehouse State/UT, ITC for GST paid on said services is not allowed.
Filing of GST returns in time :- The GST returns should always be duly filed.
Inventory Tracking and Audit at regular intervals :- The inventories should be regularly tracked and physically audited.
Appointment of Authorized Representative for GST Authority :- It is always recommended to appoint a person at Warehouse as Authorized Representative for GST authorities.
How to determine Place of Supply of Services in GST in India (Other than Import/Export)?
