Urgent query on sales tax

This query is : Resolved

shivadutt (Querist)
Follow

20 May 2014
A Ltd a foreign Company and holding company of B Ltd incorporated in India, gets an order from C Ltd India.A Ltd supplies majority of the order (99%) from outside india and asks its subsidiary B ltd to procure and supply the balance material locally and send it C ltd. The cost of local procurement is reimburesed by A Ltd to B ltd.

a) is the material supplied by B Ltd procured from local vendors eligible for concessional rate of tax against C Form/ E1 transaction? (A ltd is not a registered dealer in india)

b)is invoice raiased for cost reimbusement be treated as sales and attracts CST?

c)if the above (b) trasaction doesnot attract CST , then can this be shown as export sales?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

21 May 2014 The material procured from local vendors by B Ltd for supply to C Ltd in India is eligible for C Form/E1 transaction.

The invoice raised for cost reimbursement will not be treated as sales as there is no transfer of goods involved.

The above transaction can not be shown as export sale as the goods were sold in India.

Message likes : 1 times

shivadutt

shivadutt (Querist)
Follow

21 May 2014
Sir
In VAT returns of B limited
You mean to say that invoice raised for reimbursement of Cost of material supplied by B ltd to C LTD is not required to be shown since this is not sales

We shall be showing only a material procured by the B Ltd by local Vendor (How can this be established that Goods are procured for trading )

Kindly clarify

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

21 May 2014 The material procured by B Ltd and send it to C Ltd should be against VAT invoices of B Ltd which should be shown in the VAT return of B Ltd. In the reimbursement invoice copy of the invoice of B Ltd to C Ltd to be attached and referred.