E1 Sale transaction between two related parties
Querist :
Anonymous
(Querist) 27 December 2010
This query is : Resolved
Pls anyone clarify me that if two related parties having same directors and having same business address same business premises can effect sale by transfer of documents by subsequent transfer of documents of title.In this case first sale is interstate sale under section 3(a) from third party from another state only subsequent seller and ultimate buyers are related parties (management and control as well as directors are same in both the concerns.
Futher is it possible to endorse a document of title (LR,GR or RR) from one sister concern to second sister concern at one and same address to avoid sale tax.
Thanks in advance
Querist :
Anonymous
(Querist) 28 December 2010
We are registered dealer under Punjab Vat Act.We are purchasing Formic acid from Gujarat party.After collecting order from our customers,for passing cenvat credit to ultimate buyer,in the bill raised by the party name of the ultimate buyer is also placed by the Gujarat Party in the column consignee and in the column sold to our name is mentioned.LR is being prepared in the name of ultimate buyer,means that it is case of predetermined sale by transfer of documents of title of document.Please refer to case law of A& G Projects also which creates another comlication.
Another query is that we have a private limited company and a partnership company both the directors in the company as well as partners in the firm are same(Both Husban and Wife only;).Vat and CST Registration of both the entities are different.
but address of both the concerns are same and one only.
Now due to some practical problems we are purchasing material from Gujarat in partnership firm and effecting sale in transit without any magin to our another company at the same address.
Querty is that is it possible to effect sale in transit between two related parties having one and single address where partners and directors are same.
So.can any authority whether income tax department or sale tax department prove that as the directors and partners in both entities are same and address is also same and even no margin is added in the subsequent sale.Transcation of subsequent sale is fictitious in nature and used as a tool only to avoid or evade tax.
Futher is to possible to endorse a LR/GR to own address as both the entities are having same address.
