Branch transfer

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priyesh shah (Querist)
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23 June 2012 A firm's HO is in Mumbai and its production unit is in Tirupur(Tamil Nadu). Inputs are bought Mumbai and manufactured in Tirupur. most of the goods are sold from Tirupur and only few of them are sold from Mumbai. There are 3 questions I want to ask:
1. Manufacturing in another state and selling by HO amounts to branch transfer?
2. if yes, Can branch transfer be done twice, i.e. once from mumbai to tirupur and second from tirupur to mumbai?
3. If i consider 1st branch transfer and then sold as CST sales, will it be profitable??

CA. Akhil Maheshwari, CMA, MBA

CA. Akhil Maheshwari, CMA, MBA (Expert)
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24 June 2012 Answer to ur Q1: manufacturing in another state and selling by HO amounts to branch transfer as in ur aforesaid instance, if "F" form is issued by the branch office/consignment agent(Tirupur receiving goods as branch/stock transfer) to its head office/principal (Mumbai who is sending the goods by way of stock/ branch transfer). The H.O./Principal produces such F forms to its assessing authority to prove such stock/branch transfer. As per section 6A(1) submission of F form is mandatory to prove stock transfer. Otherwise, the transaction will be treated as sale for all purposes of CST Act.
But if a customer say B in Tirupur wants to purchase some goods of special description which is not normaly manufactured by H.O. Mumbai and Mr B places order with H.O. in Tirupur for manufacturing special descriptioned goods. Now if H.O. Mumbai manufactures such ordered goods and send them to its branch at Tirupur then such movement will be an interstate sales and not a branch transfer since the movement of goods was due to a predetermined contract of sales.

over to ur 2nd query, rather it is yes, stock/branch transfer can be done twice, as transfer from H.O. to branch is stock/branch transfer, or from branch to other branch or branch to H.O. is stock/branch transfer.....

now last but not the least, coming to ur Q3. considering it as stock/branch transfer is beneficial 'cause VAT liability still exists. The buyer though can very well claim ITC of the tax subject to the state VAT laws. Thus proving it branch transfer is beneficial as no CST liability will arise.....

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