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Resale of goods in the state of purchase without bringing it

30 November 2011

A company in Delhi purchased goods in Kolkata from another company and sold the goods to one of it clients based in Kolkata without bringing the stock in Delhi. What are the Vat implications on both the transactions(purchase and sale) for the purchaser company in Delhi? Is local Vat applicable in any of the transaction?

Regards,

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9 Replies

Yogesh Bhandari (CA FINAL Student) (429 Points)
Replied 30 November 2011

The same covered in CST aspects and under E-I Form transactions net.

RAJU (LEARNER) (1089 Points)
Replied 01 December 2011

VAT is a state subject and hence Delhi will not have any jurisdiction for goods bought & sold in Kolkata.. In this case, the Company needs to register itself in the State of Kolkata & pay the applicable VAT in the state of Kolkata.

Pankaj Arora (Learner) (3134 Points)
Replied 01 December 2011

Sorry sir but may I know what is the reason behind it to register under vat in Kolkata?

RAJU (LEARNER) (1089 Points)
Replied 01 December 2011

The liability towards VAT arises in the State in which the transactions took place.. VAT is a State subject and hence the respective State Government will have jurisdiction to levy tax on the sales effected in the respective States. As the goods are bought & sold in Kolkata, it is the the provisions of West Bengal VAT Act which will be applicable and accordingly the revenue on purchase & sale will have to go to West Bengal.

Pankaj Arora (Learner) (3134 Points)
Replied 01 December 2011

But as per in query if dealer is in delhi with register dvat than I don’t think that he is also responsible for register in westbengal vat act…

ACMA Obulirajan R (M.Com, ACMA) (1119 Points)
Replied 01 December 2011

Both are covered under cst sales..

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RAJU (LEARNER) (1089 Points)
Replied 01 December 2011

A review of definitions provided in respective State VAT Acts will make it clear that those statutes will be applicable to the respective States. The statutes will provide that the provisions are extended to whole of state of ........

Imagine a situation where tax rate is beneficial in one state compare to other States. Here to take benefit of tax, the dealers may register in the State in which the rates are beneficial and deal in goods in other States!!!!! The effect will be that the state in which the goods are purchased are sold will be deprived of tax revenue....

When the resources in the form of men, infrastructure (roads etc.,) are being made use in the state in which the transactions are effected, the relevant revenue should also be earned by the State in which purchase & sale takes place....

In Case of Central levy like Income Tax, the authority will have the jurisdiction to assess the person across the Country. In case of State levy like VAT, the boundaries within the State will be the jurisdiction. So transactions effected beyond the jurisdiction (of Delhi in this case) can not be subjected to tax. Similarily, just coz the dealer is not registered, the levy can not be made ineffective in the state in purchases & sales are being made (Kolkata).

RAJU (LEARNER) (1089 Points)
Replied 01 December 2011

To make it easy, letz compare this with Income Tax....

Suppose a foreign company doing operations in India, say buying & selling of goods without PAN is liable for Income Tax on the Income in India? Yes it is..

Here, assume that Delhi in par with Foreign Country and Kolkata as India

To compare this with the query, though Delhi dealer is registered in delhi, he is liable for VAT in Kolkata (Similar to foreign company earning income in India though it is registered in foreign country).

Jurisdiction for every statute varies. Like in Income tax it is across the Country, VAT is for particular State. The way India can levy tax on income in India, State of West Bengal will be levying VAT for transactions in Kolkata.

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