Dear Sir
A is registered with Sales atx authorities in 3 states WB, JH & Orissa, being a trader of iron ore & having Licenses to trade iron ore.
B is a Mines owner Registered with Orissa sales Tax .
C is a intregrated steel plant registered with Sales Tax WB.
A wish to buy Iron ore from B to supply to C. But the ITC (Input Tax Credit ) reversal policy in Orissa State is not allowing A to procure ore from B in A's Orissa registration (Other wise the cost of tax impication will be too high almost 4%)
Therefore, A plans to buy Iron Ore from B to sell Cin their Jharkhand Registation & sells to C. All materials will be consigned from B to C by railway Rake (Consignor : B & Consignee : C) to avail Railway Freight Benefit for manufacturers by railway.
Can it be executed in the following manner.
C issues a purchase order on A for supply of Iron Ore from the Mines of B,in turn A issues PO on B for suuply of iron ore to C as consignee, B obtain permissions from Mining Department for supply in similar manner, Book Railway Indent with B as Consignor & C as Consignee. On supply of Empty rake, Iron ore loaded & dispatched to C, Railway Receipt will be with Consignor as B & Consignee as C (For meeting Railway Criteria for concessional freight ). B issues an invoice with 2% CST on A 's JHarkhand Registration against form C mentioning the Consignee as C, inturn A issues invoice on C including the basic amount plus CST plus A's Profit Margin (NO Addional CST) mentioning Consignor as B,
C gets the way bill at WB endorsed based on the Railway Receipt & invoice on A raised on C,
C makes payment by way of Inland Letter of Credit (90 Days Usance) to A for getting it discounted at A's bank counter. A makes payment to B for supplies as per the invoice. The railway freight can be paid by C directly or B or A has to make the payment of the Railway Freight & to include in the invoice..???
C issues a form C to A , A in turn issues a Form C to B & B issues a form E1 to A to get exempted from the subsequent sales...
kindly guide us if the above transaction is correct ...
Best Regards
Mukesh Dhandhania
