stock transfer is taxable
This query is : Resolved
26 October 2009
HI ALL SENIORS
WE MADE FINISHED GOODS IN STATE (A) AND TRANSFRED TO STATE (B). ALL BASIC PUR. OF MATERIALS WERE FROM CENTRAL. ACTAULY WE HAVE CUSTOMER IN STATE (B). & THEY WANTED TO TAKE VAT CLAIM.SO WE OPEND THE BRANCH THERE & GIVING THE SUPLY. NOW STO,WHEN WE SUMMTD RETURN ASKING US TO PAY TAX IN STATE (A),ON GROUND THAT U R MAKING SALES VIDE STOCK TRANSFERD . IS IT CORERECT. WE R IN SIMPLE PRACTICE THAT THIS STOCK TRANSFRED & AFTER THAT IF V RECV THE ORDER FROM SINGLE BYER FOR FULL QUTY. THERE IS NOTHING WRONG. V R NOT ESCAPNING THE TAX. MAY I NEED YOUR HELP. IS THERE ANY COURT REF. ALSO FOR SATAE OF HARYANA,DELHI,U.P OR MAHARASTR.
MAHINDERBHARTI@YAHOO.CO.IN
WE MADE FINISHED GOODS IN STATE (A) AND TRANSFRED TO STATE (B). ALL BASIC PUR. OF MATERIALS WERE FROM CENTRAL. ACTAULY WE HAVE CUSTOMER IN STATE (B). & THEY WANTED TO TAKE VAT CLAIM.SO WE OPEND THE BRANCH THERE & GIVING THE SUPLY. NOW STO,WHEN WE SUMMTD RETURN ASKING US TO PAY TAX IN STATE (A),ON GROUND THAT U R MAKING SALES VIDE STOCK TRANSFERD . IS IT CORERECT. WE R IN SIMPLE PRACTICE THAT THIS STOCK TRANSFRED & AFTER THAT IF V RECV THE ORDER FROM SINGLE BYER FOR FULL QUTY. THERE IS NOTHING WRONG. V R NOT ESCAPNING THE TAX. MAY I NEED YOUR HELP. IS THERE ANY COURT REF. ALSO FOR SATAE OF HARYANA,DELHI,U.P OR MAHARASTR.
MAHINDERBHARTI@YAHOO.CO.IN
Ram Avtar Singh
(Expert)
26 October 2009
when you are seling to local customer you should charge local vat.
CA SANJAY MUKHERJEE
(Expert)
26 October 2009
Hi Mahinder,
You can transfer stock to your branch in other state and can sell from ur Branch there.
However I think you have not much sale in state A and the State Govt. is not getting much revenue from your company.
Moreover all your purchase is from other states so; STO developed a tendency to disallow your stock transfer.
If you can produce all the documents, like F Form and consignment notes to prove the physical transfer STO can't legally disallow and even if he does you can go to appeal.
You can transfer stock to your branch in other state and can sell from ur Branch there.
However I think you have not much sale in state A and the State Govt. is not getting much revenue from your company.
Moreover all your purchase is from other states so; STO developed a tendency to disallow your stock transfer.
If you can produce all the documents, like F Form and consignment notes to prove the physical transfer STO can't legally disallow and even if he does you can go to appeal.
SARATHY RP
(Expert)
26 October 2009
Dear Mr Mahinder,
Do not mix up issues. Your purchases could be from any source. As far as your sales is concerned, you are stock transferring certain goods from State A to State B. Then from State B you are selling these goods to customers locally in State B under loca VAT regn. / tax invoice. This is perfectly alright, as long as a bulk quantity of "off-the shelf" or "standard goods" are being stock transferred and then sold, as a business practice.
What is not acceptable to your STO (RIGHTLY SO) is that in pursuance of a specific contract, you are stock transferring goods and then selling those goods to particular customer.
This is not accptable, as the customer has been identified at the time of manufacture itself. Hence as per section 9 (1) of the CST Act, the State A has the locus standi to tax the nature of transaction explained by you.
Thanks.
Sarathy
Do not mix up issues. Your purchases could be from any source. As far as your sales is concerned, you are stock transferring certain goods from State A to State B. Then from State B you are selling these goods to customers locally in State B under loca VAT regn. / tax invoice. This is perfectly alright, as long as a bulk quantity of "off-the shelf" or "standard goods" are being stock transferred and then sold, as a business practice.
What is not acceptable to your STO (RIGHTLY SO) is that in pursuance of a specific contract, you are stock transferring goods and then selling those goods to particular customer.
This is not accptable, as the customer has been identified at the time of manufacture itself. Hence as per section 9 (1) of the CST Act, the State A has the locus standi to tax the nature of transaction explained by you.
Thanks.
Sarathy
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