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.

AI Summary

Clarification on VAT: Pre-Conceived Sales in Interstate Transactions Require Tax Payment, Including Identified Customer Stock Transfers. A user inquired about the VAT implications on two business practices: interstate stock transfers followed by local sales, and direct interstate billing with indirect delivery arrangements to reduce freight costs. The question focused on whether the latter scenario should be treated as an interstate sale or a stock transfer. The response clarified that if the customer is identified before the stock transfer, the transaction is considered a 'Pre-Conceived Sale' and is treated as an interstate sale, requiring tax payment. The reply referenced a Supreme Court judgment for further details.