Trading sales in a Manufacturing Company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2010 Is it possible to make trading sales in a manufacturing company engaged manufacturing Steel Rolling Mill equipment. The Company has an Excise registration but intends to effect trading sales in raw materials without excise(VAT Applicable) .i.e dealing as a middle man.Is it necessary to take a new vat registration for this type of sales? Is excise Notification required?

CA Deepak P. Agrawal

CA Deepak P. Agrawal (Expert)
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20 January 2010 A manufacturing company can do trading business also. but for that you have to check that at the time of taking registration the dealer has also mentioned regarding the trading business.
In my view no excise will be leviable as this will not amount to manufacture.
Regards

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2010 but the case of dealing in raw material has just come in recent time

Could U Pls specify

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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02 August 2025 Hey! Here's a detailed response on your query about trading sales in a manufacturing company:

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### Trading Sales in a Manufacturing Company — Key Points

1. **Can a manufacturing company do trading sales?**

* Yes, a manufacturing company can also carry out trading activities alongside manufacturing.
* The key is to properly disclose the trading activity during registration or get the registration amended accordingly.

2. **Excise Registration and Trading Sales**

* Excise duty is applicable **only on manufactured goods**.
* **Trading sales of raw materials or other goods are not subject to excise duty**, as there is no manufacturing involved.
* Hence, excise duty **should not be levied on trading sales**.

3. **VAT Registration for Trading Sales**

* VAT (or GST now) is applicable on trading sales of goods like raw materials.
* You **may need to obtain a separate VAT registration** or ensure your existing VAT registration covers trading activities.
* If your existing VAT registration is only for manufacturing, check with the local VAT authorities whether you need a separate registration or amendment.

4. **Excise Notifications**

* No specific excise notification is required for trading sales as excise applies to manufacture, not trading.
* However, maintain clear documentation to segregate manufacturing and trading transactions.

5. **Additional Compliance**

* Maintain separate books of accounts for manufacturing and trading to avoid confusion during audits.
* Inform your tax consultant or legal advisor to update registrations or licenses as needed.

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### Summary Table

| Aspect | Details |
| -------------------------------------- | ------------------------------------------------------------------- |
| Trading sales in manufacturing company | Allowed if disclosed in registration or amended accordingly |
| Excise on trading sales | Not applicable as no manufacturing involved |
| VAT registration | Ensure VAT registration covers trading or get separate registration |
| Excise notification | Not required for trading sales |

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If you want, I can help you draft an application for amending your VAT registration or advise on maintaining separate accounts for manufacturing and trading.

Would you like that?

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