09 November 2009
Dear Expert, I needed a clearance regarding Goods in transit sale. We have a party A - Buyer & B- Seller. B sold his Machine to us then we got a buyer & we sold the same Machine to A we didnot take the delivery of Machine. Now the Invoice of B is on 31/10/2009 Dilivery challan is of 15/10/2009 & Advance received to us from A - buyer was on 28/8/2009 before machinery moved then can it be considered as Goods i Transit sale. Please guide. What is goods in Transit sale. what are the points to be taken care of . Is payment date to be considered. & any reference i can go through for 6 (2) Sale. Please guide..........
09 November 2009
A simple example can be that, suppose A of Mumbai has sold goods to B of Ahmedabad. The goods are dispatched by lorry and L.R. is taken out by A (Mumbai) where in A is consignor and B (Ahmedabad) is consignee. If before taking delivery from transporter, B decides to sell his goods to ‘C’ of M.P., he can simply endorse the L.R. in name of ‘C’ and the sale will be complete. This is the second or subsequent interstate sale in the course of same movement. In this case A must have charged 2% CST in his bill. Being a second interstate sale effected by B to C, B is equally liable to pay CST on above transaction. However the intention of Government is not to levy multiple taxes on sale taking place in one course of movement. Therefore the subsequent sale is given exemption. However it is subject to production of given forms. In above example, the sale by B to C will be exempt if B produces before his assessing authority Form EI issued by A of Mumbai and Form ‘C’ issued by C of M. P. In light of above it is clear that the sale effected by transfer of documents of title to goods is eligible for exemption u/s. 6(2). These exempted sales are also referred to as “Sale in transit.
M/s. State of Gujarat vs. Haridas Mulji Thakker (84 STC 317)(Guj). In this case the facts are that the Gujarat dealer received order from another dealer in Gujarat. For supplying the said goods, the vendor dealer in Gujarat placed order on Maharashtra dealer and instructed to send the goods directly to the Gujarat purchasing party. Gujarat High Court held that the sale by Maharashtra dealer to Gujarat vendor dealer is first interstate sale and the one by Gujarat vendor dealer to Gujarat purchasing dealer is second interstate sale. Gujarat High Court also held that the second interstate sale is exempt u/s. 6(2) being effected by transfer of documents of title to goods. In this case though there was no physical transfer of L.R. etc. Gujarat High Court held that there is constructive transfer by instruction and hence duly covered by section 6(2). This judgment duly covers both issues, that there is no need for physical transfer and also that having predetermined parties does not affect the claim.
09 November 2009
hi, Actually but if C makes payment to B before the sale or the l.R. date that is in advance that means it was decided in advance that machine will be sold to him then is it Goods in Transit sale. Whatis E1 & E2? Please guide. Thanks & regards Ami
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