CST SALES RETURN

[venkat eswaran]

Dear Experts,

WE got our CST sales rejected matls after 2 years. Since it is more than 6 months we are not able to reverse the CST 2 percent paid amount,

but we need to account in sales return. we have accounted in sales return without reversing CST 2 percent .

My question is whether we have to show this transaction in CST Return or Not? Since no CST is revresed. Please give your valuable reply

Thanks & regards

Venkat

[YAGAY andSUN]

Dear Venkat,

You are statutorily required to show such rejected material in the Statutory Returns, though no benefit of tax would be available to you.  If you do not incorporate in your CST Return, then, Department may treat it as purchases from unregistered dealers and may ask to pay the tax on such purchases.

You would have to establish one to one correlation in this regard at the time of conducting VAT/CST assessment with documentary evidences.

Regards,

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

AI Summary

Business Must Report Rejected Materials in CST Returns Despite No Tax Reversal, Avoiding Additional Tax Risks A business faced an issue with CST sales returns after receiving rejected materials two years post-sale, which prevents reversing the 2% CST paid. They accounted for the sales return without reversing the CST and inquired whether to report this in the CST Return. An expert advised that the rejected materials must be reported in the statutory returns, even without tax benefits. Failure to do so might lead the tax department to treat them as purchases from unregistered dealers, potentially incurring additional tax. Proper documentation is essential for VAT/CST assessments to establish a clear correlation.