Input VAT Credit on Branch Transfer

no credit available in this case !!

Tax treatment under VAT for Stock transfer:

§  Stock transfer is not a sale and there is no VAT liability

§  The Input tax credit with respect to

i)                    Inputs used in manufacture of finished goods which are then transfer

ii)                   Goods purchased which are then transferred

Is available after retention of 4% of such tax by the state governments.

frenz

1 of the restaurent ownr is charging VAT on fooodings item @ 13.5%

is dis ryt......... i think it should be 12.5%

If Branch transfer is agianst Form " F "  , Input tax credit only upto 2 % should be  reveresed  and  balance input tax credit can be used .In given case Rs. 20 should reveresed and balnce of Rs. 300 will be avillable to X - Ahmedabad.

DEAR VISHAL SIR , IN MY OPINION , BRANCH TRANSFER IS NT A SALE N CREDIT SHOULD BE AVAILABLE TO THE BRANCH WHICH HAS ACTUALLY SOLD THE GOODS ..THEREFORE IF SALE IS BEING MADE AT MUMBAI THEN MUMBAI H.O. SHOULD AVAIL  THE INPUT CREDIT.

Dear Mr. Vishal ,

In case of stock transfer there is no question arise for credit and also stock transfer will be made for cost price only.

When Stock transfer is treated as Inter state sales: When goods are dispatched to Branch office or consignment agent in other state and thereafter these goods are sold from the branch office or by the consignment agent then it is not a sales and is stock or branch transfer hence no CST liability arises.

However, if the movement of goods is occasioned on account of sales, the movement will be treated as interstate sales. It can be explained with an example

Suppose the dealer A registered in Punjab who manufactures some goods and send these goods after manufacturing to its branch office situated at Delhi wherefrom the goods are sold in Delhi. Now the movement of goods from Punjab to Delhi will be treated as stock transfer or branch transfer and for which no CST liability arises and F form will be issued by Delhi Branch to Punjab dealer.

But if a person B in Delhi wants to purchase some goods of special descripttion which is not normaly manufactured by A and Mr B places order with A in Punjab for manufacturing special descripttioned goods. Now if A manufactures such ordered goods and send them to its branch at Delhi then such movement will be an interstate sales and not a branch transfer since the movement of goods was due to a predetermined contract of sales.

Thus where goods were sold through branch, but buyer was known and identified before goods were dispatched from factory. Obviously this was held as inter state sales and not a stock transfer- Electric Construction and Equipment Co. Ltd. V State of Haryana- (1990) 77 STC 424 (P&H HC DB)

In South India Viscose Ltd. v. State of Tamilnadu-(1981) 48 STC 232 (SC)= AIR 1981 SC 1604 it was held that if there is a conceivable link between contract of sale and the movement of goods from one state to another in order to discharge the obligation under the contract of sale, the interposition of the agent of seller who may temporarily intercept the movement will not alter the interstate character of the sale.

Mr. Suraj is right. only 2% cst liability will be reversed agaisnt input credit.

Originally posted by : Shivam
	frenz 1 of the restaurent ownr is charging VAT on fooodings item @ 13.5% is dis ryt......... i think it should be 12.5%

yaar that extra 1% is SAT.. Special Additional Tax

Dear,

The VAT of foodgrain items already raised to 13.5% from the previous 12.5% by an ordinance in November in West Bengal and Haryana, that why the restruent owner has charged VAT @ 13.5%

Dear,

The VAT of foodgrain items already raised to 13.5% from the previous was12.5%  now 5% addtional surchage this for Haryana

  Add 12.5%

Add Addtional Surcharge 5%  =12.5*5%=0.625%

=totat Vat 12.5%+.625%=13.13%

pls tell me with base supporting

whether branch transfer goods within state fetches input tax credit to the trasferor branch

for example

x head office in ranchi (Jh) transfers goods to dhanbad (Jh) of Value Rs.1,00,000 and Vat charged by the ranchi office Rs.12,500 i.e invoice value Rs.1,12,500.00 in this case whether dhanbad branch shall entiltiled to take credit of Rs.12,500.00

pls comment requesting to finanlist CA

with base reply

also tell me any form would be require for supporting it

thakning you

Mr. Suraj yadav is right. In the instant case, X Ahmedabad has purchased the goods by paying local Vat and has effected a stock transfer to X Mumbai. Partial credit shall be available to X Ahmedabad in case of tax paid on purchases for branch transfer. Tax paid in excess of notional CST liability i.e. 2% in this case, shall be available for credit and X Ahmedabad can avail a credit of Rs. 30.00 ( Rs. 50 - 2% of Rs. 1000).

I think first of all, Ranchi branch can not charge Output Vat of Rs. 12500 in the stock transfer note becuase it is not a sale and simply a branch transfer. Moreover, since for the purpose of filing the Vat return, sales and purchases of all the branches and offices within a state need to be consolidated and only one return is to be submitted (as is the norm in my state), in my opinion which branch avails the ITC (Input Tax Credit)  becomes immaterial as the organisation as a whole would be availing the same. The question is pertinent in case of an inter state stock transfer of goods by a branch which they have procured by paying local VAT. 

 hi freind

Stock transfer is not a sale and there is no VAT liability

only transfer against F form.