PURCHASE RETURN RECORDED AS SALES

ansh 99 (227 Points)

21 August 2021  
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