Liability of vat - consignment sale

[Asked by Guest]

A is a direct seller as well as sells goods on consignment is consignment sales to be included as total sales in A's books of accounts and is it liable for vat, and is it to be considered as turnover for purpose of tax audit under income tax

[Subhash Majumdar]

yes this should be considered as turnover for the purpose of tax audit under the income tax actu/s. 44(AB) because consignment nature of purchase & sales is also part of trading and this traiding may be raised profit or loss but separate trading account for consignment should be prepare & part of profit or loss on consignment will be shown on Profit & Loss Account Credit side. Due to reason if the organisation face loss on other business then such loss can be set off from profit on consignment. As well as this is liable for VAT because there is no provision under the VAT Act. that consignment sale will not be treated as turnover, but if the goods are declared by Govt. as Declare goods in their Notification then consignment sale will not be treated as Turnover under the VAT Act.

I have a little confusion regarding VAT charged on consignment sales  suppose we are sending the goods on consignment basis to other state in FORM 'F' then we are not required to pay CST n is VAT chargeable, If then provide me with reasons.

AI Summary

Consignment sales treated as taxable turnover and subject to VAT; included in turnover for income tax audit purposes.
Consignment sales are trading transactions that must be included in total sales and treated as turnover for income tax audit purposes; maintain a separate consignment trading account and show profit or loss on consignment in the Profit & Loss account. Such consignment transactions are liable to VAT except where government notification specifically excludes the goods from turnover, and interstate documentation may affect central sales tax treatment.