F form sale & necessities

R R Ambavat (Querist) 06 May 2014 This query is : Resolved
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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Sankaranarayanan (Expert) 06 May 2014
Form f. Is puerly stock tranfer. This transaction only eligible between prinncipal to branch or delar. Normally the goods of stock transfer not in the unique quantity of purchases. Stock means unsold quantity keep in the place and for future sales.