Whether CST is applicable in this case?

[Ganeshan Kalyani]

Dear Expert,

I request you to please share your view on the below situations.

‘A’ is a supplier based at Gurgaon, has supplied Finished Goods to ‘B’ located at West Bengal on CST@2%, against Form ‘C’. Now ‘B’ has stock transferred some of the material to its own location in Orissa say ‘C’ against Form ‘F’. Now, due to some issue with the material , ‘C’ has directly returned the material back to ‘A’ the supplier at Gurgaon.

The question is whether ‘C’ is correct by sending the material back to ‘A’ directly. What is the tax implication?

My view:

1) ‘C’ should have sent the material back to ‘B’ so that Form ‘F’ will nullify and ‘B’ will sent the same to ‘A’ so that Form ‘C’ will be nullified.

OR

2) ‘C’ can sent the material directly to ‘A’ but purchase return invoice should be prepared by ‘B’ under instruction to ‘C’ to send the material to ‘A’.

Please discuss.

AI Summary

Can 'C' return goods directly to 'A'? Exploring tax implications and solutions under CST with Forms 'C' and 'F'. A supplier 'A' in Gurgaon sold goods to 'B' in West Bengal under CST at 2% using Form 'C'. 'B' transferred some goods to 'C' in Orissa with Form 'F'. Due to issues, 'C' returned the goods directly to 'A'. The query is whether this direct return is correct and its tax implications. The proposed solutions include: 'C' should return goods to 'B' to nullify Form 'F', then 'B' returns to 'A' to nullify Form 'C'; or 'C' sends directly to 'A' with 'B' issuing a purchase return invoice. An additional suggestion is for 'B' to issue the invoice and instruct 'C' via an official letter.