We are a manufacturing company located in hyderabad and registered with VAT. We want to open a branch at tamil nadu and karnataka states and want to do follow the following business model:
1) Sending material on 'F' form to Karnataka/tamilnadu.
2) The material will be despatched from our warehouse in karnataka/tamilnadu to a jobworker premises for making job work by using our product as per requirement of our customer.
3) The jobworker after completing the work, will despatch the final product to our customer with billing address to our branch in tamilnadu/karnataka.
We want to know what is the procedure for the above i.e. what forms we have to follow and how we have to make billing to our customer from our branch office.
12 August 2009
Is your product liable to excise duty then in case it is you will have to follow the excise regulations with regerd to job work Maintain Job work register use Form 57 F4 while sending the goods for job work to enable cenvat credit above all you will require central excise registration of the premises from where the operations will take place.on receipt of the material from the job worker see that the corresponding challan is given properly and recorded correctly. other excise regulations will also have to be complied with.
Our product is liable to excise duty and we(HO) have registered with excise.
When we have sent the goods from our HO to our branch, we will invoice it as branch transfer by paying excise duty. Then I think the branch is not liable to get register under excise. Also I think that We have to follow the procedure under sales tax act only.
10 August 2024
To manage the business model described, involving the movement of goods for job work and dealing with multiple states, you will need to follow specific procedures for excise, VAT, and other tax regulations. Here’s a detailed guide for the process:
### **1. Sending Material for Job Work**
**a. ** Interstate Transfer and Job Work Process:
1. **Send Material to Job Worker:** - **Invoice the Transfer:** You need to create an invoice for the transfer of material from your Hyderabad headquarters to the branch in Karnataka/Tamil Nadu. This invoice should include the excise duty applicable. This is treated as a transfer of goods within the company, so excise duty should be paid.
2. **Form F:** - **F Form (Central Sales Tax):** To send material to Karnataka/Tamil Nadu for job work, you must issue an **F Form** under the Central Sales Tax (CST) Act. This form is used for the inter-state transfer of goods between branches for job work or manufacturing. The **F Form** must be submitted to the Sales Tax/VAT authorities in the respective state.
**b. ** Job Work Regulations:
1. **Job Work Documentation:** - Ensure you maintain proper documentation for job work including a job work agreement, delivery challans, and receipts of the goods sent to the job worker.
2. **Excise Duty on Job Work:** - If the goods are subject to excise duty, the job worker should follow the excise rules. As the job worker is working on your material, excise duty implications need to be managed according to the Excise Act. However, if the job worker is not registered under excise, they might not be liable for duty directly but you as the principal manufacturer will be responsible.
**3. ** Receiving the Finished Goods:** - The job worker will send the finished goods to your customer or to your branch, depending on your instructions. The branch will then invoice the customer.
### **2. Billing the Customer**
**a. ** From Your Branch:
1. **Invoicing:** - The branch office in Karnataka/Tamil Nadu should issue an invoice to the customer. The invoice should be in line with the GST regulations. Since GST has replaced VAT in most states, you need to ensure GST compliance for the final sale.
2. **Input Tax Credit (ITC):** - Ensure that the GST paid on the job work is correctly accounted for and that you claim any input tax credit as applicable.
**b. ** Compliance with Excise:
1. **Excise Duty Payment:** - Excise duty should be paid when transferring goods from your headquarters to your branch, as well as when the goods are sent for job work. Ensure that all excise duty payments are accurately reflected and documented.
2. **Branch Registration:** - If you are transferring goods to a branch within the same company, you generally don’t need to register the branch separately for excise duty, but you must ensure that the head office complies with all excise regulations.
### **3. Additional Compliance Requirements**
**a. ** Maintain Records:
1. **Documentation:** - Keep detailed records of all invoices, delivery challans, job work agreements, and excise duty payments.
2. **Returns Filing:** - Ensure that all relevant returns for VAT/GST, CST, and excise duty are filed timely.
**b. ** Check State-Specific Regulations:
1. **Local Compliance:** - Verify any additional requirements specific to Karnataka and Tamil Nadu as different states may have specific rules or forms for handling job work and interstate transfers.
### **Summary**
1. **Send material to job worker:** Use Form F for inter-state transfers. Pay excise duty for transfers to the branch. 2. **Job Work:** Ensure documentation and compliance with excise regulations. 3. **Billing:** Issue invoices from the branch, ensuring GST compliance. Maintain records and file returns as required.
By following these procedures, you can ensure that your business model complies with both excise and state tax regulations.
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