Please Help: VAT Credit
Posted Date : 02-Nov-2011 , 02:07:50 pm | Posted By Raman Gulati
We are having 5 stores out of which 3 in delhi & 2 in Haryana. We purchased papers from delhi. The bill was issued by vendor on our delhi HO. However the material was consumed in Haryana & sale invoice was issued from haryana store. Can we get credit of VAT or on ?
Category : VAT | Answers : 2 | Comments : 3 | Hits : 776
Answers
Answer By: Ashish Karundia
Dear Raman,
In the instant case, there is a movement of goods from delhi to haryana i.e. the goods are delivered in Haryana and thereafter the same are sold from your haryana store. In such case, the transactonj will constitute as an inter-state sale (i.e. CST purchase for you), because local sale tax/Central Sales Tax is decided accordinhg to the movement of goods and the same is not dependent upon the location of teh buyer or where the invoices are received.
Further, there is no provision in Central Sales Tax Act,1956 which allows to take credit of the CST paid. Therefore, you are not eligible to take credit of the CST paid (it is assumed that you are paying CST on the instant transaction).
Hope the above suffice.
In the instant case, there is a movement of goods from delhi to haryana i.e. the goods are delivered in Haryana and thereafter the same are sold from your haryana store. In such case, the transactonj will constitute as an inter-state sale (i.e. CST purchase for you), because local sale tax/Central Sales Tax is decided accordinhg to the movement of goods and the same is not dependent upon the location of teh buyer or where the invoices are received.
Further, there is no provision in Central Sales Tax Act,1956 which allows to take credit of the CST paid. Therefore, you are not eligible to take credit of the CST paid (it is assumed that you are paying CST on the instant transaction).
Hope the above suffice.
Answer By: Ashish Karundia
Dear Raman, It appears that the vendor has delivered the goods to you in Delhi itself, and thereafter the goods are stock transferred by you on your own to the Haryana store. In that be the case, then you can take the credit the Delhi VAT paid in excess of 2%/2.5% on the goods transferred i.e. you take full credit and reverse only VAT @ 2%/2.5% on the said goods. [Refer Section 10 (3) of the Delhi VAT Act, 2004 read with Rule 7(1) of Delhi VAT Rules, 2005]. However, if the goods are delivered in Haryana, then CST will be applicable. Hope the above answers your query.
Comments
Parminder Singh
02-Nov-2011 , 02:17:14 pmyes, u can take VAT credit in delhi HO.
Raman Gulati
02-Nov-2011 , 03:19:44 pmDear Ashish, Thanks for your reply Actually the party has charged VAT because we had told them to raise invoice to delhi office & we our self took the delivery of goods from Vendor. So vendor is not on default. We should w/o VAT amount as expenses. Is it right treatment ?
Ashish Karundia
02-Nov-2011 , 09:26:02 pmDear Raman, It appears that the vendor has delivered the goods to you in Delhi itself, and thereafter the goods are stock transferred by you on your own to the Haryana store. In that be the case, then you can take the credit the Delhi VAT paid in excess of 2%/2.5% on the goods transferred i.e. you take full credit and reverse only VAT @ 2%/2.5% on the said goods. [Refer Section 10 (3) of the Delhi VAT Act, 2004 read with Rule 7(1) of Delhi VAT Rules, 2005]. However, if the goods are delivered in Haryana, then CST will be applicable. Hope the above answers your query.