Vat & cst invoicing
This query is : Resolved
26 August 2015
Dear Sirs,
We are manufaturing the Vehicle Tracking boxes and we Registered under Tamilnadu VAT. Our Head office which is functioning in Gurgaon, We send some boxes to our head office and there they made some sales but our Head office is not registered under their local sales tax. The sales made in our head office (Invoice number providing from Chennai office) is considered as the sales made from our Chennai office and it shows in our CST Return as interstate sales this method of invoicing is Correct? or Our head office need to be registered under their local sales tax for the sales made there?. Kindly advice
We are manufaturing the Vehicle Tracking boxes and we Registered under Tamilnadu VAT. Our Head office which is functioning in Gurgaon, We send some boxes to our head office and there they made some sales but our Head office is not registered under their local sales tax. The sales made in our head office (Invoice number providing from Chennai office) is considered as the sales made from our Chennai office and it shows in our CST Return as interstate sales this method of invoicing is Correct? or Our head office need to be registered under their local sales tax for the sales made there?. Kindly advice
31 August 2015
Dear Sirs,
Kindly Advice me for the above mentioned queries.
Kindly Advice me for the above mentioned queries.
02 August 2025
Hey! Here’s a clear take on your VAT & CST invoicing situation with your Chennai manufacturing unit and Gurgaon head office:
---
### Your situation:
* Manufacturing & VAT registered in Tamil Nadu (Chennai).
* Head office in Gurgaon (Delhi NCR) **not registered under local sales tax**.
* You send goods from Chennai to Gurgaon HO.
* Gurgaon HO sells the goods locally there but invoices are issued from Chennai (same invoice series).
* Chennai office includes these sales as **interstate sales in CST return**.
---
### What’s correct practice here?
1. **Movement of goods from Chennai to Gurgaon:**
* When Chennai sends goods to Gurgaon, it is an **interstate transfer**.
* Chennai office should treat this as **branch transfer** (not a sale) **if Gurgaon office is same legal entity**.
* Such transfers are usually reported under **Form E1 (branch transfer declaration under CST Act)** — no tax charged here but recorded as stock movement.
2. **Sales made by Gurgaon office:**
* If Gurgaon (Delhi) is making local sales, it **must be registered under Delhi’s local VAT/Tax laws**.
* Since Gurgaon is **not registered**, it **cannot legally issue invoices or collect VAT**.
* The sales from Gurgaon are **local sales in Delhi**, which should be reported by Gurgaon office.
* If Gurgaon is unregistered, this can be a compliance issue.
3. **Issuing invoices from Chennai for sales made in Gurgaon:**
* This is **not correct** for local sales in Delhi.
* Sales in Delhi must be invoiced by the entity registered there.
* If Gurgaon is not registered, technically no legal local sale can be recognized there.
4. **Impact on returns:**
* The Chennai office **should not include Gurgaon’s local sales as interstate sales** in CST return.
* Interstate transfer to Gurgaon is not a sale, so it should be declared via Form E1.
* The Gurgaon office should file local VAT returns and declare sales there.
---
### Summary Table:
| Activity | Correct Approach | Registration Required at Gurgaon? |
| ---------------------------------- | ----------------------------------------------- | --------------------------------- |
| Goods sent from Chennai to Gurgaon | Branch transfer via Form E1, no tax on transfer | No |
| Sales made locally in Gurgaon | Gurgaon office invoices & pays local VAT | Yes |
| Chennai invoicing Gurgaon sales | Incorrect | — |
---
### Recommendations:
* **Register your Gurgaon office under Delhi VAT/local tax.**
* Treat shipments to Gurgaon as **branch transfers**.
* Gurgaon should issue sales invoices and file local returns.
* Consult local tax advisor in Delhi for registration and compliance.
---
If you want, I can help draft a note or checklist to get Gurgaon office registered and compliant.
Want me to?
---
### Your situation:
* Manufacturing & VAT registered in Tamil Nadu (Chennai).
* Head office in Gurgaon (Delhi NCR) **not registered under local sales tax**.
* You send goods from Chennai to Gurgaon HO.
* Gurgaon HO sells the goods locally there but invoices are issued from Chennai (same invoice series).
* Chennai office includes these sales as **interstate sales in CST return**.
---
### What’s correct practice here?
1. **Movement of goods from Chennai to Gurgaon:**
* When Chennai sends goods to Gurgaon, it is an **interstate transfer**.
* Chennai office should treat this as **branch transfer** (not a sale) **if Gurgaon office is same legal entity**.
* Such transfers are usually reported under **Form E1 (branch transfer declaration under CST Act)** — no tax charged here but recorded as stock movement.
2. **Sales made by Gurgaon office:**
* If Gurgaon (Delhi) is making local sales, it **must be registered under Delhi’s local VAT/Tax laws**.
* Since Gurgaon is **not registered**, it **cannot legally issue invoices or collect VAT**.
* The sales from Gurgaon are **local sales in Delhi**, which should be reported by Gurgaon office.
* If Gurgaon is unregistered, this can be a compliance issue.
3. **Issuing invoices from Chennai for sales made in Gurgaon:**
* This is **not correct** for local sales in Delhi.
* Sales in Delhi must be invoiced by the entity registered there.
* If Gurgaon is not registered, technically no legal local sale can be recognized there.
4. **Impact on returns:**
* The Chennai office **should not include Gurgaon’s local sales as interstate sales** in CST return.
* Interstate transfer to Gurgaon is not a sale, so it should be declared via Form E1.
* The Gurgaon office should file local VAT returns and declare sales there.
---
### Summary Table:
| Activity | Correct Approach | Registration Required at Gurgaon? |
| ---------------------------------- | ----------------------------------------------- | --------------------------------- |
| Goods sent from Chennai to Gurgaon | Branch transfer via Form E1, no tax on transfer | No |
| Sales made locally in Gurgaon | Gurgaon office invoices & pays local VAT | Yes |
| Chennai invoicing Gurgaon sales | Incorrect | — |
---
### Recommendations:
* **Register your Gurgaon office under Delhi VAT/local tax.**
* Treat shipments to Gurgaon as **branch transfers**.
* Gurgaon should issue sales invoices and file local returns.
* Consult local tax advisor in Delhi for registration and compliance.
---
If you want, I can help draft a note or checklist to get Gurgaon office registered and compliant.
Want me to?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- TDS 194-T applicability
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Regarding Applicability of Tax Audit u/s 44AB
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Section 50-fixed asset-->building ceases to exist
- Withdrawal in cash from partners capital account by partner
- TDS on Complimentary "Desi Ghee and Gold Coin" Provided to KBC Contestants
- Consolidated financials
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
