Inter-state transaction not considered by ao

This query is : Resolved

CA Vaibhav (Querist)
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17 March 2015 we are located in mumbai. our company imported good from Switzerland and landed them on Haldia West Bengal.
the buyer of the good picked them directly from the haldia port and issued a C Form for it.
we raised a bill against this C form.
Now the STO says this is not an interstate sale and Maharashtra VAT is asking for VAT payment.
please let us know any way out.
Kindly quote case law.

CA Vaibhav

CA Vaibhav (Querist)
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17 March 2015 we are located in mumbai. our company imported good from Switzerland and landed them on Haldia West Bengal. the buyer of the good picked them directly from the haldia port and issued a C Form for it. we raised a bill against this C form. Now the STO says this is not an interstate sale and Maharashtra VAT is asking for VAT payment. please let us know any way out. Kindly quote case law.

Read more at: https://www.caclubindia.com/experts/modify_message.asp?entry_id=955840

CA Vaibhav

CA Vaibhav (Querist)
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20 March 2015 No VAT experts in CA Club ????

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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01 August 2024 In your case, the situation involves a dispute over whether the transaction should be treated as an interstate sale under VAT regulations. Here’s a step-by-step approach to address the issue:

### **Understanding the Situation**

1. **Interstate Sale Consideration:**
- **Location of Seller and Buyer:** Since your company is in Mumbai and the buyer picked up the goods from Haldia, West Bengal, the transaction should be considered an interstate sale under the principle of location of goods.
- **C Form Usage:** The C Form is used for inter-state transactions under VAT to claim concessional tax rates. If the buyer issued a C Form, it indicates that the transaction was intended to be treated as an interstate sale.

2. **Key Points to Address:**
- **Place of Supply:** According to the VAT rules, the place of supply of goods in interstate sales is where the goods are delivered, which, in this case, is Haldia, West Bengal.
- **Interstate Transaction:** Even though the goods were picked up directly from Haldia, the sale is interstate because the movement of goods from one state (Maharashtra) to another (West Bengal) was involved.

### **Steps to Address the Issue**

1. **Review VAT Regulations:**
- **Interstate Sale Definition:** Verify the definition of interstate sales in the VAT Act applicable in Maharashtra. Generally, interstate sales are those where the movement of goods is from one state to another.

2. **Provide Evidence:**
- **Shipping and Delivery Documentation:** Provide evidence showing that the goods were shipped from Maharashtra and delivered in Haldia, West Bengal.
- **C Form:** Submit the C Form issued by the buyer, which should support the claim that the transaction was interstate.

3. **Appeal or Representation:**
- **File a Representation:** If the Sales Tax Officer (STO) is not recognizing the transaction as interstate, file a representation or appeal with the concerned authorities, including the VAT Commissioner, explaining the situation and providing all relevant documentation.
- **Seek Legal Opinion:** Consult with a tax advisor or legal expert specializing in VAT to draft a comprehensive representation or appeal.

4. **Case Law Reference:**
- **Relevant Case Law:** Refer to case laws where similar issues have been adjudicated. One such case is:
- **"State of Maharashtra vs. Tata Engineering & Locomotive Co. Ltd."** which deals with the interpretation of interstate sales and movement of goods. Although the specifics might vary, this case and similar judgments can provide a basis for your argument.
- **Ensure Case Relevance:** Make sure that the case law you refer to is relevant to the VAT Act applicable in Maharashtra and addresses interstate sales.

### **Sample Representation**

Here’s a simplified outline for your representation:

```text
To,
The Sales Tax Officer,
[Name of the Department],
[Address of the Department].

Subject: Representation Regarding Interstate Sale and C Form Acceptance

Dear Sir/Madam,

We are writing to address the issue regarding the VAT payment on our transaction involving the import of goods from Switzerland, which were landed in Haldia, West Bengal. The buyer picked up the goods directly from Haldia and issued a C Form for this transaction.

We request that the transaction be treated as an interstate sale based on the following points:
1. The goods were imported into India and subsequently transported to Haldia, West Bengal.
2. The C Form issued by the buyer supports that the transaction was intended to be an interstate sale.
3. The place of supply of goods, as per VAT regulations, is the location where the goods are delivered.

We request you to kindly review the documentation and consider the transaction as interstate for VAT purposes. We have enclosed all relevant documents, including the C Form and shipping details, for your reference.

We appreciate your prompt attention to this matter and look forward to your favorable response.

Yours faithfully,
[Your Name]
[Your Position]
[Company Name]
```

### **Summary**

- **Interstate Sale:** The transaction should be treated as interstate based on the movement of goods and the C Form.
- **Documentation:** Provide all relevant evidence to support the interstate nature of the sale.
- **Appeal:** File a representation with the VAT authorities if needed.
- **Legal Advice:** Consult with a tax expert for a detailed review and legal representation.

By following these steps and providing the necessary documentation, you should be able to address the VAT issue and clarify the nature of the transaction.

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