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CST VAT treatment for Purchase Return relating Purchases >6m

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Sanjay Agarwal

MANAGER

96 Points Posted on 24 August 2009

Our firm is Retailer (in Maharashtra), is delaer of Adidas. We receive purchases from Adidas Gurgaon against C-Form.

In 2008-09 Q3, we Returned material ( old stock/ Non-running Item ) of Rs.9 lakh to Adidas Gurgaon. This material is relating to Purchases within Six months = Rs. 1 Lakh ( Shoes ) and Purchases beyond six months = Rs.8 Lakhs.

My consultant says, Purchase Return of Purchase relating beyond six months will not be treated as Purchase Reutn. What does this mean?

Pl help me to understand the Accounting treatment as well as the CST-VAT Treatment of above Pruchase Return.

Regards,

Sanjay Agarwal

snjy_1 @ yahoo.com

Replies (1)

Guest

Posted on 20 December 2010

he is right , as the purchase reture beyond six months is treated as a sales not a purchase return so u cant reverse the entry , it means u need to pay cst for the purchases and cant even claim the set off as its a sales outside the state in simple words u need to pay tax on purchases and need to take the tax from the gurgoan party for sales .its not a purchase reture for the items which are above 6 months its should be treated as sales