CST Transaction

[Ganeshan Kalyani]

I would like to discuss Vat impact on a scenario where generally a business practices, such as 1) A company does Interstate Stock transfer, thereafter sell it to local vendor by charging Vat.

2) Company does direct billing to customer in other state. Since the billing is for more than one customer, the goods are dispatched to company location and thereafter it is sorted and loaded in small vehicle to deliver it to customer.

The discussion here is point no 2, where the sale is to direct Interstate customer but the delivery arrangement is done indirectly to save freight cost. Would this be treated as point no 1 and tax would be payable or it is a clear Interstate sale to customer.

kindly through some light, how it is termed in the provision of VAT Law.

[YAGAY andSUN]

Dear Ganeshan,

If you recognize customer prior to stock transfer, then, such transaction would tantamount to "Pre-Conceived Sales" and it would be treated as interstate sales not the stock transfer. You would have to pay the tax on such transactions.

For details, please check the Judgment announced by the Hon'ble Supreme Court in the matter of Hyderabad Engineering.

Regards

TeamYAGAY and SUN

AI Summary

Pre-conceived sales treated as interstate sales when customer identified before stock transfer; tax thus becomes payable. If the ultimate buyer is identified before the goods are moved, the transaction constitutes Pre-Conceived Sales and is to be treated as an interstate sale for VAT/CST purposes, attracting tax; the position is supported by the Hyderabad Engineering judgment.