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?
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