Dear All,
I am the India distributor for a brand and have tied up with a retailer on SOR basis. We issue them Tax invoice but the payments terms are 10th of next month for the sales effected in the previous month. They charge us a commision of 30% on the net proceeds i.e. after VAT/CST & any discounts (so we pay VAT & CST for the actual sales effected)
The thing is inspite of this arrangement they issue us Form C and claim setoff against input Vat/CST (which they don't pay upfront) Also every 6 months they keep returning us good on a challan.
Since an invoice has been issued we include it in our sales turnover but we haven't received any upfront payment from them but are required to pay VAT/CST mentioned in the invoice.
My questions to the distinguished members of this forum are:
1) Is the retailer liable to pay VAT/CST mentioned in the invoice? If so when?
2) Can the retailer claim set off for the input vat which they have not paid us?
3) When they issue us Form C, it literally means that they have paid us the CST mentioned in the invoice, but in reality they haven't.
4) Is a SOR agreement which is a mix of consignment sale & Sale/SOR (which are two opposite things) valid? ex: the contract stipulates the supplier will continue to be the owner of the goods, which is contradictory to the very definition of sale.
I would really appreciate your prompt replies on the above.
Reagrds,
Shad
CAclubindia
