Barter system - vat application

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2015 Dear All

Need help to understand the following transaction and tax implication.

Example:
S - Service Provider
C - Client

S collects scrap (taxable under VAT) whose value is Rs. 50,000.00 from C but C doesn't raise any invoice for the same.
Q1: How does S book this and consider the VAT part?

Second, S has to return fresh products (taxable under VAT) worth Rs 50,000.00 and not money back to C against the scrap value.
Q: How does S give the products back to C, if S raises invoice C doesn't accept that.

Please help us?

Rupesh Jain

Rupesh Jain (Expert)

24 February 2015 you have to make invoice each stage and charge the vat as per state vat act.
w/o invoicing you cannot claim its sales or purchases.

if after invoice material reject by the buyer you can take entry as sales return.

Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2015 Thanks for your prompt response.
but as mentioned C doesn't want to raise a sales invoice for the scrap material.

Now even if S raises a self invoice for the material procured, C won't consider the same in their books.
Secondly, at the time of return of fresh good by S with invoice, C doesn't accept the invoice and show it in the book.

What to do? Please suggest

Rupesh Jain

Rupesh Jain (Expert)

24 February 2015 invoice raised on the sale time not on the purchases time.

this transaction is not valid under the law.

Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2015 Dear Sir

How shall we proceed in this matter.

C gives Commodity A to S without invoice and in return S gives Commodity B to C without invoice there is no monetary transaction involved in the same, it is only exchange that happens.

How shall we handle this, situation in similar to like jeweller buy old jwellery and than sell new.

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