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stock transfer to a branch

HARI MENON (SERVICE) (35 Points)

09 August 2010

When the materials purchased at mumbai office and the same is transferred to kerala branch, how this is to account at mumbai office and at kerala branch? Whether Mumbai office to raise a sale bill with vat on kerala br and kerala br to treat it as a purchase from the former? Kindly clear these aspects and set off therein.

Thanks

Hari

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5 Replies

B.N.Dharmendra (Senior Manager Indirect Taxation) (136 Points)
Replied 11 August 2010

Since its same company having branches in 2 different states, you need to raise a Stock Transfer Memo,(Not Invoice) mentioninig against Form-F and receiving branch should submit the Form-F at every quarter along with the Sale Patti(Sales details against the stock received), Sale Invoice, LR Transport copy . Both the office Material transfered & received should maintain a Register for Transfered/received material and also you should record the corresponding sale Invoices raised (ie. material sold to customer from that stock). There should be a one day gap between the Stock received date and the day Sales made to customer.

You have to account in your both books as Branch Transfer. End of the year submit the same to Tax department to claim the exemption. These documents should be clear otherwise department will treat it as CST sales and levy Tax & penalty

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B.N.Dharmendra (Senior Manager Indirect Taxation) (136 Points)
Replied 11 August 2010

further for your information : If you purchase and sell to a party and in turn this party sell to 3rd party asking the 1st party send the material directly to 3rd party then the case will be treated as E1 Sales(on road sale) similar to High Sea Sales, in this case 3 parties were involved in the transaction of material. ( Manufacturer, Trader, Buyer).

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B.N.Dharmendra (Senior Manager Indirect Taxation) (136 Points)
Replied 12 August 2010

Dear Menon,

I like to know the transaction told by you is one time and for own consumption or reqular buying & selling-Trading, because if its one time. Why u r not placing the order from kerala itself.. bcos against Form-C tax rate will be less and there will not be much difference in transport charges. Any branch u open in a state you have to register with local tax department.

If the material purchased some time back and you r going to tfr.to ur branch, Stock Transfer is ok.

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