Kindly assist in below query for one of our clients.
Facts of the Case
1. Some time in the year 2010 ABC Ltd. Brazil had imported in its own name, a machinery of the declared value of Rs. 51 lakhs to India for the purposes of an exhibition in Ahmedabad. At the time of import of machinery a declaration was filed with the customs authorities that the said machine would be re-exported after completion of the fair and accordingly no import duties were paid.
2. However, the said re-export did not happen for various reasons and owing to the efflux of time the said machinery was then moved from Ahmedabad to ABC Ltd. Brazils Customer in Haryana through an invoice showing the consignee as a customer in Haryana. The value of the machinery was shown as INR 51 Lacs. Thereafter, import duties including interest and storage charges have also been paid by a clearing and forwarding agent on behalf of ABC Ltd. Brazil to the custom authorities sometime in the month of July, 2011.
3. ABC Ltd. Brazil now desires to sell these goods (which are physically lying with its customer in Haryana), to a prospective customer in Maharashtra for an approximate value of Rs. 31 lakhs i.e. at a substantial loss.
4. ABC Ltd. Brazil has no place of business or operations in India and is a foreign company registered under local laws of Brazil. They have no registrations whatsoever under the customs or VAT authorities in any state of India.
5. ABC Ltd. Brazil also has a subsidiary namely ‘ABC Ltd. India’ which is a private limited company recently established in India and also having registered office in New Delhi.
Queries:
1. ABC Ltd. Brazil desires to sell this imported machinery to its customer in Maharashtra at a price of approx. of Rs. 31 lakhs. Since ABC Ltd. Brazil does not have any VAT or Customs registrations, how would the sale and physical movement of goods be effected from Haryana to Maharashtra?
2. Assuming that the sale is effected what is the mechanism through which payment will be made by Maharashtra to Brazil/ ABC Ltd. India (can foreign remittance be made against this sale or otherwise how will the funds ultimately be remitted to Brazil)?
3. Can ABC Ltd. India show ownership of these goods on account of purchase from ABC Ltd. Brazil or any other mechanism so as to sell this machinery to Maharashtra and therefore seek VAT/CST registrations under the respective state laws.
4. Any other FEMA or Custom Duty implications on the above transactions need to be examined.
05 June 2012
You have informed that ABC has an office in India in Delhi.
In consultation with the owner of the place where the machinery is currently lying can be considered as additional place of business and incorporated in VAT tin registration of Delhi Office.
Invoice can then be raised from that premise and sold to the customer as interstate sale by either charging full rate of CST or 2% against form C.
or follow the temporary registration procedure of haryan which is stated hereunder:
Registration, furnishing of security, payment of tax and assessment of casual trader. section 25.
29. (1) A casual trader shall, at least three days before commencing his business in the State, make an application in Form VAT-A3 in person or through his authorised agent to the officer incharge of the district who shall assign the same to the assessing authority. (2) On receipt of an application made under sub-section (1), the assessing authority shall verify immediately the contents thereof and shall, after obtaining such further information as it may consider necessary for estimating the tax liability of the applicant, direct him to deposit in the appropriate Government treasury or pay in cash against receipt in Form VAT-G4 an amount, which shall not exceed estimated tax liability for seven days or such lesser period for which he wishes to conduct business, as security. (3) The assessing authority shall, after the proof of payment of security has been furnished to him, allot a temporary registration number to the casual trader and shall issue him a registration slip in Form VAT-G5 along with as many declarations in Form VAT-D3 as shall meet his genuine requirement against payment of the price thereof. (4) The officer incharge of a district shall maintain a register in Form VAT-G6 showing the record of registration, assessment, payment of tax and cancellation of registration of casual dealers in his district. (5) A casual trader shall pay tax on sales effected by him in a day on the following day in the manner laid down in rule 35. (6) Every casual trader shall furnish a return in Form VAT-R5 in respect of his business to the appropriate assessing authority immediately, but not later than three days, after the closure of his business in the State. The return shall be accompanied with the proof of payment of tax and unused VAT-D3 declaration form(s), if any. (7) The assessing authority shall, after examination of the return furnished to it by the casual trader, used and unused VAT-D3 forms issued to him, the accounts maintained by him including the sale invoices issued, assess him to tax on the same day when the return is received or as soon afterwards as possible and after adjusting any tax due from him refund the balance amount of security to him but where any amount is found due from him after adjustment of security, he shall pay the same immediately. The details of each case for assessment shall be entered in the register in Form VAT-G3.
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