Dear Mr. Gaba,
To constitute interstate sales, one of the basic requirement is that there should be sale. If a person sends goods outside from its state to its branch office in another state then it is not sale because you cannot sell goods to yourself. Similarly if a dealer sends goods to its agent in another state who stocks and sells goods on behalf of the dealer, such agent is called consignment agent and such stock transfer is also not considered as interstate sales since there is no sales involved in it, sales will take place when such agent will sell goods. But to prove such stock/branch transfer, F form is required to be produced as proof.
F form required for stock transfer- F form is required to be produced as proof of stock transfer. As per section 6A(1) submission of F form is mandatory to prove stock transfer. Otherwise, the transaction will be treated as sale for all purposes of CST Act.
F Form is issued by the branch office/consignment agent receiving goods as branch/stock transfer to its head office/principal who is sending the goods by way of stock/ branch transfer. The H.O./Principal produces such F forms to its assessing authority to prove such stock/branch transfer.
One F Form for one month: First Proviso to Rule 5 of CST Rules 1957 provides that one F form covering receipts during the month can be issued. If space in F form is not adequate, a separate list may be attached as annexure to form F giving details, provided that the annexure is firmly attached to the form. The blank form has to be obtained from sales tax authority in which the transferee is situated, i.e. State where goods were received. If the form is lost, indemnity bond has to be given and duplicate form clearly marked as Duplicate can be issued.
When Stock transfer is treated as Inter state sales: When goods are dispatched to Branch office or consignment agent in other state and thereafter these goods are sold from the branch office or by the consignment agent then it is not a sales and is stock or branch transfer hence no CST liability arises.
However, if the movement of goods is occasioned on account of sales, the movement will be treated as interstate sales. It can be explained with an example
Suppose the dealer A registered in Punjab who manufactures some goods and send these goods after manufacturing to its branch office situated at Delhi wherefrom the goods are sold in Delhi. Now the movement of goods from Punjab to Delhi will be treated as stock transfer or branch transfer and for which no CST liability arises and F form will be issued by Delhi Branch to Punjab dealer.
But if a person B in Delhi wants to purchase some goods of special descripttion which is not normaly manufactured by A and Mr B places order with A in Punjab for manufacturing special descripttioned goods. Now if A manufactures such ordered goods and send them to its branch at Delhi then such movement will be an interstate sales and not a branch transfer since the movement of goods was due to a predetermined contract of sales.
Thus where goods were sold through branch, but buyer was known and identified before goods were dispatched from factory. Obviously this was held as inter state sales and not a stock transfer- Electric Construction and Equipment Co. Ltd. V State of Haryana- (1990) 77 STC 424 (P&H HC DB)
In South India Viscose Ltd. v. State of Tamilnadu-(1981) 48 STC 232 (SC)= AIR 1981 SC 1604 it was held that if there is a conceivable link between contract of sale and the movement of goods from one state to another in order to discharge the obligation under the contract of sale, the interposition of the agent of seller who may temporarily intercept the movement will not alter the interstate character of the sale.
CAclubindia
