After receipt of PO by branch from customer can I transfered the goods from factory for further sale or not? - Reg

[Rajavarapu Nageswar Rao]

Dear Sir,

a) We have much more impressed / interested to read on your articles on sales tax / vat matters in various states.

b) My Name is R Nageswar Rao working in HBL as a Senior Manager - Indirect taxes.

c) We request your good selves small opinion requires on the following:

   1) One of our customer were issued PO in the name of branch address in the Month of April 2012     in  bulk quantity.          

2) Respective branch not having the stocks and send an indent to factory for manufacturing  purpose  from one of our  factory.
   3) The factory produced the goods and dispatched on stock transfer basis to respective branch on    piece-mill / partial shipments  in May 2012 for further sale to customer.
   4) After receipt the goods the branch prepares tax invoice and delivered goods to the customer  destination  and  charged VAT rate.
   5) As per Section  6A of CST act the branch provides F forms and same F forms we have submitted to the  unit commercial tax authorities at the time of annual assessments.

Please let us know the above transactions is branch sale or not as per  Section 6A of CST or not?  Please provide if any case law on the above issue, it is great  help to us.

Best Regards,
R Nageswar Rao,
Senior Manager - Indirect Taxes.

AI Summary

Goods Transfer from Factory to Branch After PO Considered CST Sale, Not Stock Transfer, Under Section 6A. A query was raised about whether goods can be transferred from a factory to a branch for further sale after receiving a purchase order (PO) from a customer. The branch, lacking stock, requested the factory to produce and dispatch goods on a stock transfer basis. Upon receipt, the branch issued a tax invoice and delivered the goods, charging VAT. The question was whether this constitutes a branch sale under Section 6A of the CST Act. The response clarified that the transaction is not a stock transfer but a pre-conceived sale, thus classified as a CST sale, citing a relevant Supreme Court judgment.