Cst on goods received on sample

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This query is : Resolved

CA Rakhi Govil (Querist)

28 July 2011 Hello Experts,

We are wholeseller in rajasthan of medicines. The Company, to whome we purchases goods is situated in Gujrat.

They send some goods to us as sample to the doctors.They raise a bill on which they show CST @ 2% and also show that it is sell against C Form.

Now they are asking us to send C form.
My query is this, that though these goods received to us are as sample for the doctors not for normal sale, should we issue C form to them???
How we will account for this sample goods received and distributed as sample to the doctors???
Since these goods dont have any commercial value do the gujrat company is required to show these goods as sell against C form??
What reply we should give to them??

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

01 August 2011 Mr R Govil,
It depends on two ways:
1)If they are sending the doctors' samples as free of cost you should not make any payment for such bills and 'C' form should not be used.
2)If you are making payment while receiving these medicines,distribute to doctors,and later claim refund from the manufacturer,then you can issue 'C'forms.
In the first instance both you and your manufacturer can put the samples in separate stock,based on a business policy,and no need to show as sales and purchases.
In the second case for samples also normal sales and purchaes are recorded and
related costs are settled through reimbursements.
MJK

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