Obtaining multi-state GST registrations through virtual place of business (VPOB) services has enabled thousands of e-commerce sellers to expand operations nationally and gain access to multiple fulfillment centers. However, an important aspect that is often overlooked is the timely renewal of VPOB rental agreements.
In a recent incident, the non-renewal of a VPOB rent agreement in Maharashtra led to the cancellation of GSTIN for an electronics accessories seller. With inventory stuck and sales halted for months during reinstatement, the company suffered total losses amounting to Rs. 1.5 crore.
Experts warn that non-compliance with VPOB address validation can be considered a violation of GST laws. This may result in show cause notices by GST authorities, penalties, and even the cancellation of GST registration in the worst cases.
E-commerce sellers who rely on VPOB for GST must not ignore the renewal of VPOB agreements just to save some minor costs. Neglecting this responsibility can result in non-compliance, ultimately leading to GST cancellation and significant financial losses.
Some major complications that e-commerce sellers can face due to the non-renewal of VPOB include:
Inventory becoming stuck in the GST-cancelled state
Inability to claim Input Tax Credit (ITC) from the GST-cancelled state
Lengthy process to reactivate the GST registration
Potential penalties imposed by GST officers for non-compliance
Difficulty in obtaining a new GST registration in any other state
While VPOB services take care of compliance matters, timely VPOB renewal remains the responsibility of the seller. Even minor lapses have been shown to escalate into major financial and operational troubles.
Experts advise e-commerce sellers to diligently track renewal dates, ensure address validity is never compromised, and choose service providers that prioritize recurring charges and maintain compliance. Maintaining compliance is key to ensuring smooth business operations across India.