Sales return - VAt credit

[venkat eswaran]

Sir,

for slaes return we r taking VAT credit back for the returned goods. there is a 6 months time period. my query is is there is any financial year limitation? that is can take credit back now  for goods sent in mar 2012. fin year 2011-12. now fin year 2012-13.   or 6 months from the date of invoice ?  kindly clarify

 

[Lok B. Chand]

Whenever you will received back your sale reurn goods, you can Credit in Excise & VAT. There is no financial matter count, But your Excise Dept. treat it as under rule 16 and it should clear with in six monts.

[YAGAY andSUN]

In VAT Laws, Sale should be return back within 6 months from the date issue of invoice or receipt of material whichever is later.

[Vishal Gill]

Dear Mr. Khatri,

Would you kindly refer any notification/circular or any other guidline regarding Sale should be return back within 6 months from the date issue of invoice or receipt of material whichever is later under VAT Laws.

[Lok B. Chand]

Dear Mr. Venkat Read the Under 16 A in Central Excise Manual, actuly there is no time limit for clear the received material for rectification, but you should mentin the phisical record for verification whenever need so it shoud clear as soon as possible for our connivance.

[YAGAY andSUN]

Dear Mr. Gill,

This is for your kind information.

Best Regards,

Pradeep Khatri

Mobile:- 9818131923

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 Sales Return and Tax Treatment

Goods Return

Goods returned within 6 months of the date of sale-Sec 8A (b) provides that if goods are returned by buyer within six months, its sale price will be deducted from ‘aggregate sale price’, if satisfactory evidence is produced before sales tax authority in respect of the same.

Dy.CST v.Motor Industries Co (SC); (1983 (2) TMI 251 - SUPREME COURT OF INDIA) 

State of Maharashtra v.BASF (India) Ltd (SC).(1994 (3) TMI 346 - SUPREME COURT OF INDIA)

 Rejected Goods

Goods rejected-in such case, the period of six months is not applicable, as in case of rejected goods, there is no ‘complete sale’ at all within the meaning of CST Act or Sale of Goods Act, as the purchasing party has not accepted the goods. Return of goods is a bilateral transaction brought about by consent of seller and purchaser, while rejection of goods is a unilateral transaction, open only to purchaser. It means that sale has not taken place to attract tax.

Metal Alloy Co.(P) Ltd. V. CTO, Bhavanipur Charge calcutta (1977);

State of Tamilnadu v. General Engineering Stores(1993)

AI Summary

Sales return time limit governs VAT credit claims, while rejected goods are treated as non sales outside the ordinary return timetable. VAT credit for sales returns is allowed by deducting the returned goods' sale price from aggregate sales when satisfactory evidence is produced, commonly within a six month period measured from the invoice date or receipt of goods; administrations also require prompt clearance and physical recordkeeping for returned items. By contrast, rejected goods, not being accepted by the purchaser, are treated as no completed sale and fall outside the ordinary return time limit, so tax adjustment depends on the absence of a completed sale and supporting records.