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What should be charged cst or vat?

07 January 2016

Dear Members, Need some advice as what should be charged to customer CST or VAT? If customer buys product from a company having sales office both in Delhi and Mumbai.And company make sales to customer in Delhi under works and service contract.Company manufacture there goods at Mumbai plant and shipped directly to customer in Delhi. And Delhi sales office issue the invoice to customer. What should be charged on material goods value and what should be charged on service contract. Thanks & Regards Vaibhav

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3 Replies

CA Komal Puri (Practicing Chartered Accountant) (163 Points)
Replied 09 January 2016

The goods have been shipped from Mumbai, so the Mumbai Sales office should issue an invoice. It will be a CST Sales for the Mumbai office. As regards the works contract, the tax will be charged on the basis of the nature of the same as per Rule 58 of MVAT Rules and as per the notifications issued by the department.

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VAIBHAV ARYA (5 Points)
Replied 09 January 2016

Hi Komal,

Thanks for reply but in actual the company charged sales tax I.e. 12.5% from the customer .As on delivery challan the customer refers to there Delhi sales office with shipping address of actual customer.And later on Delhi office issue invoice to actual customer with sales tax rather than CST. Just need to know is it correct.

Regards

Vaibhav

CA Komal Puri (Practicing Chartered Accountant) (163 Points)
Replied 09 January 2016

No the treatment is incorrect. The Mumbai office needs to issue the invoice with CST and not VAT. For charging VAT you have to issue the goods to the Delhi Branch office under FORM F and then sell it to the customer. Now the Mumbai office can issue a fresh invoice charging CST. The rate can be kept same i.e.12.5%. Then in this case no C-Form will be required.