C Form for material is supplied excess

[saket s]

Whether C Form can be issued even material is supplied excess than PO/ Contract?

We had sold excess material to customer / client to complete order. Supplied quantity was more than PO quantity. Now the customer is refusing to issue Form C arguing that we had supplied excess material.

Pls let me know if there any case law on this issue.

Thanks

Saket

[MUKUND THAKKAR]

please clear the following point.

1. your customer will pay you excess amount against supply of excess material ?

[saket s]

No, the client is not paying anything extra. The excess materials were supplied to complete the desired work.

[MUKUND THAKKAR]

At the end of year non receipt of payment against this supply will be write off..

As per my view convert this supply as free supply.. and collect c form of balance amount.

Generally, VAT is to be collected on sale of goods to a person in a consideration..

If goods are given at free of cost, does not attract VAT. But if It is dutiable product, then it has excise duty liability. which you had paid..

[YAGAY and SUN]

If you treat this material as FOC supply, then Input Tax Credit needs to be reversed proportionately in addition to reversal of CENVAT credit.

[Ganeshan Kalyani]

In my view Form C is not required for free of cost material. This is because you will not be charging anything for the excess material supplied. As such the sales register will not show the amount of excess material supplied. Hence no need to collect form c. Thanks.

AI Summary

Free supply: No VAT or C Form for goods supplied without consideration; reverse input tax and CENVAT credits.
When excess goods are supplied without additional consideration, treat the excess as a free supply: it does not attract VAT and Form C is not required for that portion. However, proportionate reversal of input tax credit and CENVAT credit is necessary. Alternatives include writing off the unpaid supply at year end or collecting Form C only for the invoiced/considered quantity, with corresponding credit reversals recorded.