Sale tax liability on consignment basis by a trading company

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Gireesh (Querist)

19 March 2012 Dear Sir,

As the company is facing some short term financial problem, it is borrowing some amount from one of its employees and from the directors. Is it mandatory that these funds should come to the company's bank accounts and then meet the expenses or is it ok if the payment is made directly by the director/employee to the supplier against items purchased by the company ?

Kindly clarify

Thank you

saurabh kumar

saurabh kumar (Querist)

19 March 2012 Dear All

One Trading company (fashion accessories) transfer goods on challan to
another Trading company(pantaloon, reliance etc.) who further sales to
end user (customer).My question is on the first company sales tax
liability , if 2nd company make a Local sale then first company needs
to pay DVAT 12.5 % , and if 2 nd company make inter state sale then
2nd company would book as F- form sale and collect F - Form from the
2nd company. Is it correct ?

or otherwise ..can we consider (local sale) as consignment sale and
do not pay DVAT 12.5 % as 2nd company has already paid DVAT 12.5 % to
deptt. while selling to customer..and in our books we show as
consignment sale and show balance stock (lying with 2nd comp store) as
consignment stock.

I request to my expert colleagues to guide me the right procedure for
2nd company to minimize the sales tax liability.

Thanks & Regards
Saurabh Kumar
Chartered Accountant