While auditing i found that , HO sales goods to its branches through a sales tax invoice and records sales and branch records purchase.
At year end the stock which is unsold at year end at branch level is sent back to HO for that they make sales tax invoice to HO and record it as sales and HO records it as purchase. Is this treatment correct?? In my opinion HO should make credit note for the same and record it as sale return whereas branch should record it as purchase return !!!
note : HO and branch are in different states
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Purchase return recorded as sales.
Replies (4)
Quick Summary
Branch being in different state, & for ease of GST calculations, there is no harm in such procedure. There is no tax concealment.
But for Balance sheet purpose , is this correct ? isnt it means inflating the sales
Though the practice is not correct, but for some reason followed somewhere, probably at the end of the year. Though there want be any difference in net profit or in BS, but TO gets inflated marginally.
In protest against ADMIN for its discriminatory behavior among different members, I leave the portal permanently. Good Bye.
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