CST Demanded on Branch Transfer

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BHUPESH PRADHAN (Querist)
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24 June 2011 Our Factory is situated in Chhattisgarh. We have various Branch Offices in various States out side Chhattisgarh. We transfer our products to our Braches in “Branch Transfer Basis”. After that Receiving Branches give Form “F” monthly to Chhattisgarh. The products which we have transfer to various states are sold in the state & in the respective states we have paid VAT. In some cases the received date & date of sale is same. Now the Chhattisgarh Sales tax Department has demanded CST on the Branch Transfer treating it as “Predetermined Sales”. Please advice in this regard

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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25 June 2011 Mr B Pradhan,
The contention held by the Chattisgarh Sales tax departmnt has no basis.A costomer could be waiting for the goods to arrive at his place and immediately he may buy it. The concept 'predetermined sale' arises when there was already a contract existing before you despatched the goods to your branch and specifically you assign a consignment as meant for such predetermined customer. Then only it can be treated as 'Predetermined sale'. Certain products have seasonal sales and when there is short supply quick sales do take place. Further, any assumption of 'Predetermined sale' by the sales tax dept should be supported by documentary evidence to show apportioning of any goods to a specific contract of supply. Otherwise such contention is baseless and illegal.
MJK

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