R R Ambavat (Director) 06 May 2014

F form rules & necessities

Dear sir/madam, Our company is a trader of yarn having its operations in UP. We are registered agents of a mill (supplier) X in Maharashtra. We will be obtaining these goods under F Form from X. Following are the queries that i have with regards to F Form sale

1) What are the documents required to prove that it was only a stock transfer & not deemed sale to evade taxes. Would a transport L/R be sufficient?

2) Can we show profits in our books on the sale. Eg. goods are transferred at Rs. 150/- per piece & sold at Rs. 155/. Can we show Rs. 5 as a profit in our books?

3) Is there a minimum time period for which the goods need to be shown as stock?

4)Does the registered agent need to compulsorily have & show a godown?

5) What is the liability of a registered trader in case the tax authotiry implies that goods were sent as deemed sales.

6) X of Maharashtra would be transferring the goods to us at UP under F form. We in turn would sell these goods interstate to Mr. Y of Rajasthan under C-form & Mr. Y would be selling the same goods in transit to Mr. Z of Punjab under E-1 Form. What will the flow of forms be in this scenario? I would really appreciate a clarity on this matter as we have not dealt with F forms earlier. Many thanks in advance

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Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 07 May 2014

Goods may also be moved from one State to another State and may be delivered in other State without a sale. A principal may transfer his goods to his agent, head office or manufacturing unit in one State may transfer its goods to its branches or depots in other States, a purchasing agent may dispatch goods to its principal in other State. In all such cases, there is no inter-state sale. Also no sale is effected during their movement of goods from one State to another. For claiming that goods have moved from one State to another other than by reason of sale, the consignor of the goods is required to produce Form F, duly filled and signed by the consignee of the goods.
Blank Forms F are issued by the Sales Tax / VAT / Commercial Tax Department of the State, in which goods are delivered, to the consignee dealer. For this, consignee should be registered in the State in which goods are to be delivered. Recently, in case of M/s Ambika Steels, the Hon’ble Supreme Court has also upheld the liability of furnishing of Form-F in cases in which goods are sent for job work or goods returned are received back.if they found it is sales, then tax tobe paid on sales as applicable and showing wrong entries in the returns, you have to pay penalty.
Form-F is issued by transferee of goods to transferor of goods and one single form may cover consignments of goods transferred during one calendar month