Stock transfer under form f
Sanju
(Querist) 26 June 2016
This query is : Resolved
A (P) Ltd. is a manufacturer that transfers stock from state of Punjab to another state X with NIL tax liability via transfer under Form F. In the Invoice it is mentioned in BOLD that it is Consignment transfer.
Goods are received by a Proprietor Mr. Ram in the other state X. Mr. Ram has taken VAT, CST and ET registration in his residing state (i.e State X). He gets Form F issued and submits it to the Company periodically.
Now, Mr. Ram sells the goods to customers of different category as follows:-
Category 1 - Sales made at NIL Margin
Category 2 - Sales made at 4 % Margin
Category 3 - Sales made at 12% Margin
Also Mr. Ram receives Commission at 2% on Goods received and sold out.
Mr.Ram pays Output VAT collected and also Entry Tax on value of goods received. However Entry Tax is Reimbursible by the Company to him.
Consequently I am confused as to the treatment of such transactions in Income Tax and Sales Tax in the hands of Mr. Ram the proprietor regarding following matters:-
1) Whether this transaction Comes under purview of Consignment Agent or Distributor? what will the nomenclature or nature of Business of Mr. Ram?
2) Whether Form F given is valid as per law?
3) What will be the Turnover in his hands (Mr. Ram) for Income Tax purpose?
4) Can Mr.Ram make sales to customers at high margin when he is receiving goods via Stock Transfer under Form F ?
5) Whether the company A (P) Ltd. has to take VAT registration in the transferee state X for showing stock transfer under Form F ?
Suhail A.Siddiqui
(Expert) 27 June 2016
F form transfer is made to the agent or at own branch. your fifth question reply is "it is possible"
Fourth question reply: If Ram made sale on high margin to customer, it should mention in agreement between agent and Principle because "F" transferred goods does not have any lean on goods, agent is only custodian.
Third: Nil turnover in the hand of ram since it is not his sale.
Second: F form transfer for agent is valid as per central Sales Tax act.
First: Such transactions are between consignement agent and principles. and agent sell principle goods at his direction.
Sanju
(Querist) 28 June 2016
Thanks Suhail Sir for the reply.
In this case of consignment sale Can u please guide as to who is required to obtain VAT and CST registration in State X whether Ram or the Company ?
