HI ALL!
We are holders of Central Excise Dealer registration, located in Chennai registered under TNVAT and CST statutes.
Our Supplier is in the state of Gujarat and we buy goods from them and sell to our different customers all over India by means of intransit sales (sale by transfer of documents in title).
When our customer places a Purchase Order to us, we places a similar purchase order to our supplier. Suppier raises invoice charging CST @ 2% on our name as buyer and our customer name as Consignee,as the place of delivery of goods are metioned in our PO. We receives the goods from supplier’s factory and delivers to our Customer’s place billing them CST @ 2% as per the PO.
The transportation responsibility is undertaken by us.
Now, in a peculiar case, one of our customers located in Gujarat itself raised a PO on us. As usual, we raised another similar PO to our supplier mentioning the place of delivery as Gujarat itself.
At this point, our supplier charged Gujarat VAT @ 15% (12.5+2.5) saying since the goods are not moving out of Gujarat, CST will not be applicable.
As per the PO from our customer we are charging CST @ 2% in our invoice to Customers.
We don’t have VAT registration in the state of Gujarat. So, the VAT Charged by our supplier cannot be taken as input tax credit for us (I belive so).
Ultimately we have a loss of 13% sales tax (15-2) by this transaction duty to the levy of local VAT by our supplier.
Is there any option for us or for our customer to take credit of this 15% VAT charged by our Supplier?
If so, Kindly advice. This is urgent,
Thanks in advance.
CAclubindia
