ex factory delivery but invoice out of state

[Asked by Guest]

I have a company in Maharashtra and have received a PO from a company in UP. However, they want to pick up the goods ex-factory and said they will provide c from .

can i charge CST @ 2% or CST @ 12,5% or do i have to charge VAT at 12.5%

please guide.

[MUKUND THAKKAR]

If customer provide you c form than charge only 2% CST other wise charge Vat 12.5%

customer claims he can give C from but our CA says that if delivery is ex factory, VAT @12.5 should be charged.

[MUKUND THAKKAR]

If your sales invoice is contain the address of your customer which has clearly established that your sales is out side the state, agsinst the form C.

Ex factory is only delivery terms between you and your customer.. I think this is not count as a local sales.. please ask your CA to provide clarification of VAT dept if any..

[DR.MARIAPPAN GOVINDARAJAN]

May I know the clear meaning of ex-factory' since I have some confusion on this.

[YAGAY and SUN]

Dear Dieter Rasquinha,

In our view this sale have been concluded in Maharashtra itself. We support the view of MARIAPPAN GOVINDARAJAN Sir' and mention the following judgment for your kind perusal.

CST - Whether in order to constitute an inter-State sale, movement of goods should be occasioned by way of sale and such movement of goods must be inextricably connected with sale - YES: Supreme Court
By TIOL News Service
NEW DELHI, MAR 18, 2015: THE issue before the issue is - Whether in order to constitute an inter-State sale, the movement of goods should be occasioned by way of sale and such movement of goods must be inextricably connected with sale. YES is the answer.
Facts of the case
2015 (3) TMI 786 - SUPREME COURT = Commissioner of Commercial Tax Versus M/s. Desai Beedi Company, Andhra Pradesh

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

 

[Ganeshan Kalyani]

Ex-factory means price at factory and does not include any other price outside the factory. This means purchaser has to pick up the delivery from factory which means purchaser is buying directly from factory. In present case you are buying from UP at ex-factory which means you are locally buying in the state of UP and thereafter the goods will be transporter to Maharashtra. Thus first you have bought it locally in UP so VAT will be applicable and thereafter no tax on stock transfer from UP to Maharashtra.

[Ganeshan Kalyani]

Further I guess queriest has no office in UP and if he just picks up the goods from UP and thereafter the goods are transported to Maharashtra then whether it would be interstate purchase or intrastate purchase. Please discuss.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Sir, Ex-factory means when you lift the goods from the factory thereafterall the expenses i.e.loading, unloading, transportation, insurance, VAT and local taxes (octroi), if any, up to the destination are to be borne by the customer. As soon as you lift from the factory, factory owner's responsibility ceases and customer's responsibility starts.Ownership of the goods shifts to the buyer from factory owner at factory gate. It can be likened to a situation when we buy any goods e.g. TV from a dealer, we ourselves are responsible for safe arrival of goods at home. How goods reach our home ? It is our headache. We will pay for transportation, loading, unloading etc.Transit risk is ours.

If factory owner executes any contract/agreement with the buyer to the effect that he (owner) will be responsible for safe delivery at buyer's home, then it will not be ex-factory or ex-showroom as the case may be.

In this it would be inter-state purchase.

I am looking forward to your views.

[DR.MARIAPPAN GOVINDARAJAN]

Thanks for all those who have got cleared my doubts along with querist.

Dear All,

thanks for your valued inputs , However, i cannot see a defined conclusion. will it be CST @ 2%, CST @ 12.5 % or VAT @12.5% . Please give me your views.

[KASTURI SETHI]

DEAR SH.DIETER RASQUINHA JI,

I do not know about VAT OR CST. However, since inter-state sale is involved, CST will be applicable. At what rate ? I don't know. About VAT also other experts can guide.

[Ganeshan Kalyani]

In my view VaT @12.5% will apply as the delivery has taken place within the state of UP.

AI Summary

Inter-state sale determination: invoice details and Form C govern whether CST or VAT applies to ex-factory pickups.
Whether ex-factory pickup by an out-of-state buyer is an inter-state sale depends on invoice details, transfer of ownership at factory gate, and provision of Form C. Ex-factory denotes buyer assumes responsibility at the factory; if the invoice establishes an out-of-state sale and Form C is furnished, treat as inter-state sale with concessional CST; absent Form C or where sale is treated as concluded in the seller's state, VAT may apply.