E1 sales / purchase

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Anupriya Vijayakumar (Querist)
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02 February 2011 We purchase fibre from Nagpur and sell within Tamilnadu through E1 Sales.

1. Should the first invoice (i.e)invoice of the original seller must contain a word as E1 Sale anywhere? Whether the delivery address in this invoice must be first buyers address or the subsequent buyer address? Should the first invoice must contain any information about the subsequent buyer?

2. When B purchase from A for rate of Rs. 100/- Can B raise E1 sales invoice to C for Rs. 105/- including his profit or the rate should be the same as A?
If B can, should he have to pay tax for the difference amount- On what basis CST or Local Vat rates?
If B doesn’t have to pay any tax won’t there arise any question regarding revenue loss to govt.?

3. To my knowledge of E1 sales, I understand that the delivery address in the GR/LR copy should be the original buyer and it should be duly endorsed in favor of the subsequent buyer by the original buyer. But my doubt is that finally the freight will be paid by the subsequent buyer. So in the carriers receipt or the carriers freight invoice whose address should be mentioned- the first buyer or the subsequent buyer?

I need a detailed information about DOS and DONOTS to followed in raising E1 sales invoice.
Is there any reference book published by govt or their authorized authority about E1 Sale?

Anand Agarwal

Anand Agarwal (Expert)
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03 February 2011 1. There is no compulsion to have subsequent buyers address on first invoice. Also on need to mention E! sale.

2. Yes, B can charge Rs105 to C. B will definitely add his mark up. And if sale is subsequent sale in transit then no need to charge CST. Govt. has specifically allowed exemption on second and subsequent leg of sale in transit transactions. Therefore there is no question of revenue loss to govt.

3. Yes, first buyer has to endorse LR in favour of second / subsequent buyer. In some cases in LR itself delivery address is mentioned as second buyer (that is being done practically but ideally one should endorse LR in favour of second buyer).

4. E1 sale concept is that govt. has allowed express exemption on subsequent inter-state sale that to before termination of the movement of goods. Therefore, E1 exemption would be allowed only when subsequent sale is being effected during the course of movement of goods. Once the movement is terminated, one cannot claim E1 sale exemption.

5. If first buyer(B) is claiming E1 exemption then in order to claim the exemption he must receive C FORM from second buyer(C) and E1 FORM the first seller(A).

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