In so far as a decision as to whether goods should be stock transferred and then sold to customers by the branch or should direct inter-State sales be effected, there can be no generalisation. The decision has to be taken on a VAT impact analysis of each individual business.
The tax implications to be considered are:
In the case of inter-State sale, the buying dealer has to pay a non-VATable CST while the selling dealer will get the benefit of input tax credit.
In the case of stock transfer, though there is no tax on the inter-State movement, the input tax credit will be restricted to the tax paid on inputs in excess of 4 per cent.
