C Form for items given to customer free of cost

[saket s]

Hi,

• ABC is having manufacturing facility in the state of Maharashtra, ABC sales its goods on pan India basis to its customer through depots.
• ABC also makes interstate purchases for promotional items i.e. goods which will be given to customer free of cost as part of marketing /sales incentive schemes
• These promotional items are first transfer to various depot (as scheme is applicable to PAN India) and ABC does centralized purchases.
• These promotional items given to customer free of cost as sales promotion

The issue is can ABC issue C forms to its vendor for purchasing these promotional items?

Pls enlighten with suitable caselaw.

Saket

[Ganeshan Kalyani]

Sir, the samples given free of cost along with main products is not taxed separately as the cost of sample is inbuilt in the price of the product. And if free sample is given away separately then VAT is not applicable as there is no sale value. This is for your information.

Now coming to your query, purchasing of samples from vendor has a purchase value which you had paid. For you it is not a free sample and hence you can very well issue Form C. The requirement is you have to first amend your CST registration certificate to include these items. The amendment will indicate / inform the VAT department that these are your business purchases. Thanks.

[saket s]

Sir, thanks a ton...

AI Summary

Form C entitlement: purchasers may issue Form C for bought promotional items given free to customers, subject to registration amendment.
Entitlement to issue Form C for interstate purchases of promotional items intended for free distribution: free samples given with products are not separately taxable, and items purchased by the business from a vendor are treated as business purchases allowing issuance of Form C; the purchaser must amend its CST registration to include these items to inform the VAT department.