Tax on purchase from unregistered dealer

This query is : Resolved 

07 June 2009

Dear Experts,

I have a query regarding goods sold by an unregistered dealer from one state to another state. The Unregistered dealer is situated in gujarat and making sales to a manufacturer in maharashtra. The goods sold are Raw Synthetic Fiber. Now upto what limit (in value) can the seller continue selling in this way. Is there any tax implication on the buyer of the goods i.e. to pay any purchase tax. Can the Buyer make payment through bank to the seller. Is there any TCS applicability on such transaction. What can be the consequences or penalties in case of delay in registration for and charging VAT/CST.

CA Sanjeev Kr Jain (Expert)
08 June 2009

CST is applicable from the very first interstate sale

raghunandan (Expert)
08 June 2009

Legally there will be a problem for the buyer in Mah. For the sales effected by Mah. dealer, the unaccounted purchases may be treated as suppressed TO and the same may be brought to tax. Interest and penalty as applicable will be levied.

CA Nitin Wadhwani (Expert)
08 June 2009

The purchases can be treated as purchases from unregistered dealers.

There won't be any hitches to the buyer excepr for reporting in VAT Audit(if he is liable otherwise not).

Better to settle the accounts through banking channels.

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