Sending Machinery Demo

[Rajendra Patil]

Sir / Madam,

We are seding machinery for demo ( interstate ) shall we have to intimate to Sales tax dept (VAT) and kindly send us format of letter to be submited to Commissioner.

M - 9844325169

[Ganeshan Kalyani]

As per VAT Act, tax is payable on sale price received from customer. The goods sent as demo will have no transaction value and there is no sale either and thus no consideration. Also in my view VAT rules does not requires to call for intimation to department about such transaction. However, views of other experts are welcomed to bring more clarity in this respect.

[Ganeshan Kalyani]

As per VAT Act, tax is levied on sale value. The said transaction in your query is a demo and not sale. VAT Act does not provide for any intimation to the department in such cases. However view of experts are welcomed to bring more clarity in this issue.

[Rajendra Patil]

Thanks sir for your valuable reply and information.

[PARTHASARATHY V]

I do agree with the above to points, when there is no sales there will not be any tax on the goods. It is better to mention the caption in the Invoice" GOODS SENT FOR DEMO PURPOSE ON RETURNABLE BASIS". If the goods sold at Demo place then you can raise a debit note on VAT/CST and pay to the department. Or if the customer wants to have the Tax Invoice with ED / VAT/CST then you have to bring back the materials, make SRN (Sales Return Note) for cancellation of old Transaction ( Keep the LR of Inward / returned materials for assessment purpose) and make fresh Invoice.

[Ganeshan Kalyani]

Thanks Parthasarathy sir for sharing your views.

[KASTURI SETHI]

Excellent interpretation indeed. Learnt a lot about VAT from Sh.Parthasarathy V and Sh.Ganeshan Kalyani, Sirs. Thanks.

[Ganeshan Kalyani]

Thank you so much Kasturi sir for liking reply.

AI Summary

No VAT notification needed for interstate machinery demos; label invoices as 'Goods Sent for Demo on Returnable Basis.' A query was raised about whether sending machinery for interstate demonstration requires notification to the Sales Tax Department under VAT rules. An expert, Ganeshan Kalyani, clarified that since the demo involves no sale or transaction value, VAT is not applicable, and no intimation to the department is required. Parthasarathy V agreed, suggesting labeling invoices as 'GOODS SENT FOR DEMO PURPOSE ON RETURNABLE BASIS' and outlined steps if the goods are sold during the demo. Kasturi Sethi appreciated the insights shared by the experts. The discussion emphasized knowledge sharing on VAT implications for demo goods.