Section 58 – Liability in Certain Cases
Section 58 of CGST Act, 2017 – Liability in Certain Cases
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Objective and Scope of Section 58
Section 58 deals with tax liability in special situations where goods belonging to a taxable person are kept or stored at the premises of another person.
This provision ensures that:
- Tax liability does not escape due to ownership–custody mismatch
- Government revenue is protected in storage-related arrangements
2. Statutory Provision – Section 58
Section 58:
Where any goods belonging to a taxable person
are kept or stored at any place belonging to another person,
the taxable person and the person
at whose place such goods are kept or stored
shall be jointly and severally liable
to pay the tax payable on such goods,
if such goods are supplied
without payment of tax.
3. Meaning of Joint and Several Liability
Under joint and several liability:
- Both persons are treated as equally responsible
- Tax authorities may recover tax from either party
- Recovery from one does not absolve the other
This strengthens tax enforcement.
4. Situations Covered under Section 58
Common situations include:
- Goods stored in godowns or warehouses
- Stock kept at agent’s or job worker’s premises
- Goods stored at third-party logistics providers
The key condition is ownership vs possession.
5. When Does Liability Arise?
Liability under Section 58 arises only when:
- Goods are supplied, and
- Tax is not paid on such supply
Mere storage without supply does not trigger tax liability.
6. Person Responsible under Section 58
Two persons are made liable:
- The taxable person who owns the goods
- The person in whose premises the goods are stored
Both must ensure tax compliance.
7. Section 58 vs Agent Provisions
Section 58 operates independently of:
Even if the custodian is not an agent, liability may still arise under Section 58.
8. Practical Compliance Implications
- Written agreements for storage arrangements
- Clear ownership documentation
- Stock reconciliation and tracking
- Ensuring tax invoices for supplies
Section 58 encourages due diligence by custodians.
9. Comparison with Other Liability Provisions
- Section 58: Liability due to storage arrangement
- Section 85: Liability of firm partners
- Section 87: Liability of company directors
Section 58 is location-based liability.
10. Related Provisions
11. Professional Insight
Section 58 places responsibility not only on the owner of goods but also on the custodian. Warehouses and storage service providers must ensure that goods moving out of their premises are fully tax-compliant.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Storage arrangements should be legally documented to mitigate joint liability risks.
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