Goods supplied for display and sales

[Ravikumar muthusamy]

Our client wishes to supply goods for display on department stores and issue his own bill on sales to retail buyers and paying commn to the department stores. is it allowed under vat act and if so what is the formalities.

[Nagarajan Kannan]

Hi

There are two transactions involved here. One is sale by your client to the retail buyers and payment of commission to the dept. stores for allowing him to display the goods.

In my opinion, for the sale to retail buyers your client has to charge the VAT at the applicable rate on his bill. As far as commission is concerned, this will fall under business auxiliary service under service tax rules. The dept.store has to charge service tax on their bill which they have to issue to your client.

Regards

Kannan

AI Summary

VAT on sales: supplier issuing retail bills must charge VAT; department stores' commission attracts service tax.
The supply for retail buyers by a supplier issuing his own bills requires the supplier to charge and account for VAT on those sales; the commission paid to the department store for display constitutes a business auxiliary service and is subject to service tax, with the department store invoicing the supplier and discharging the tax.