Difference Between Consignment And Sales
Consignment can not be treated as sales of goods. It is different from
sales. The difference between consignment and sales are as follows:
1. Ownership Consignment: The ownership of the goods remains with the consignor until sales is effected by the consignee. Sales: The ownership of the goods immediately transferred to the buyer when sale is effected.
2. Relationship Consignment: The relationship between the consignor and consignee are of principal and agent. Their relation ship are continued till terminated. Sales: The relationship between the two parties are that of seller and buyer and they terminated as soon as payment is made and goods are delivered.
3. Expenses Consignment: The expenses incurred by the consignee to execute sale and the expenses incurred by consignor to send the goods to the consignee, both are borne by the consignor. Sales: Any expenses incurred after the sale is not borne by the seller.
4. Risk Consignment: The risk of goods under consignment is always with the consignor. Sales: When the sale is made the risk is transferred to the buyer.
5. Return Of Goods Consignment: Consignee can return goods to the consignor since those are properties of consignor. Sales: A buyer can not return goods unless the goods are found defective or damaged or the seller agrees to.
6. Statement Consignment: For giving details about the goods sold and expenses incurred by him, consignee sends the account sales (generally known as sale patti) to consignor. Sales: The buyer need not submit any account sales to the seller.
7. Stock Consignment: The unsold stock with the consignee will be treated as a stock of the consignor. Sales: In case of sale, the buyer's unsold stock do not attract the seller.
8. Commission Consignment: Commission is the main consideration of consignment. The consignee performs the selling activity only for commission. Sales: Profit is the main consideration of sales.
9. Agreement Consignment: In Consignment a agreement has to be prepared between consignor and consignee, mentioning all the terms & conditions and expenses to be borne by the consignor and commission to be paid to the consignee.
Sales: No such agreement is to be prepared, infact a PO is being raised by the buyer and seller acknowledges the same.
10. Accounting Treatment
Consignment: As despatches are made as transfer of goods, these are shown as consignment stock (under current assets). Sales are effected only after receiving the account sale statement from the consignee.
Sales:Sales entries are passed at the time to dispatching of goods.
11. Statutory Forms (Sales Tax Forms)
Consignment: The consignee has to issue Form F to the consignor for the sales made by him of the goods received. At the same time the consignor mentioned in the waybill that the goods are despatched as branch transfer.
Sales:Buyer has to issue Form C, Form H, E-15 whatever depending on the nature of purchase made by him.
Hope you all are clear and can differentiate between a normal sale and a consignment sale.
1. Ownership Consignment: The ownership of the goods remains with the consignor until sales is effected by the consignee. Sales: The ownership of the goods immediately transferred to the buyer when sale is effected.
2. Relationship Consignment: The relationship between the consignor and consignee are of principal and agent. Their relation ship are continued till terminated. Sales: The relationship between the two parties are that of seller and buyer and they terminated as soon as payment is made and goods are delivered.
3. Expenses Consignment: The expenses incurred by the consignee to execute sale and the expenses incurred by consignor to send the goods to the consignee, both are borne by the consignor. Sales: Any expenses incurred after the sale is not borne by the seller.
4. Risk Consignment: The risk of goods under consignment is always with the consignor. Sales: When the sale is made the risk is transferred to the buyer.
5. Return Of Goods Consignment: Consignee can return goods to the consignor since those are properties of consignor. Sales: A buyer can not return goods unless the goods are found defective or damaged or the seller agrees to.
6. Statement Consignment: For giving details about the goods sold and expenses incurred by him, consignee sends the account sales (generally known as sale patti) to consignor. Sales: The buyer need not submit any account sales to the seller.
7. Stock Consignment: The unsold stock with the consignee will be treated as a stock of the consignor. Sales: In case of sale, the buyer's unsold stock do not attract the seller.
8. Commission Consignment: Commission is the main consideration of consignment. The consignee performs the selling activity only for commission. Sales: Profit is the main consideration of sales.
9. Agreement Consignment: In Consignment a agreement has to be prepared between consignor and consignee, mentioning all the terms & conditions and expenses to be borne by the consignor and commission to be paid to the consignee.
Sales: No such agreement is to be prepared, infact a PO is being raised by the buyer and seller acknowledges the same.
10. Accounting Treatment
Consignment: As despatches are made as transfer of goods, these are shown as consignment stock (under current assets). Sales are effected only after receiving the account sale statement from the consignee.
Sales:Sales entries are passed at the time to dispatching of goods.
11. Statutory Forms (Sales Tax Forms)
Consignment: The consignee has to issue Form F to the consignor for the sales made by him of the goods received. At the same time the consignor mentioned in the waybill that the goods are despatched as branch transfer.
Sales:Buyer has to issue Form C, Form H, E-15 whatever depending on the nature of purchase made by him.
Hope you all are clear and can differentiate between a normal sale and a consignment sale.
Dear Sir, Your explanation is very informative, I like to ask you the practical problem faced by us with our ST dept. Why the ST dept. ask for Sale Patti/ Stock Statment/ Sale Invoice from our agent, is it not sufficient submiting the Form-F to claim the consignment sales. pl. send me the format of sale patti. bn.dharmendra@gmail.com
ReplyDeleteDear Sir, Your explanation is very informative, I like to ask you the practical problem faced by us with our ST dept. Why the ST dept. ask for Sale Patti/ Stock Statment/ Sale Invoice from our agent, is it not sufficient submiting the Form-F to claim the consignment sales. pl. send me the format of sale patti. bn.dharmendra@gmail.com
ReplyDeleteHii Bellum,
ReplyDeleteAs mentioned in the first point that the ownership remains with the consignor until he received the sale advices (or known as sale patti too). You can only take it as sales after receiving the sale confirmations from your agent in which he will charge his commissions. Remember he is acting as an agent for you not as a customer.
Consignee receives goods from consignor and sale to customers on the behalf of consignor.
Normally dept. asks for Agreement copies & Form-F but its in thier power to ask for the sale patti too.
Try to convince the ST Dept and meanwhile talk with your agent to give you the required documents to avoid unnecessary demands.
By the way , you didnt mentioned the state you belongs to.
Hello Sharma ji,
ReplyDeleteCan you please send us the Sale patti format on my email id "sriharigu@gmail.com"
Thanks,
Srihari
Hello Sharma ji,
ReplyDeleteCan you please send us the Sale patti format on my email id nazimlovef@gmail.com
Thanks,
Nazim shaikh
mob +919699810229
Hello Srihari G & Nazim,
ReplyDeleteSorry for the delay, please find the link to download your required Sale patti format...
Remember that the sale patti depends on the terms of agreement between consignor & consignee.... The receiver of the material (i.e. consignee ) will issue these sale patti and after such sale patti received by consignor then only these can be booked as sales in his books of account.
https://drive.google.com/file/d/0Bw1qNoQ8YzHZYy0zYmVtZ2d6VzQ/view?usp=sharing
Hello Sharma ji
ReplyDeletePlease send me format of Sale Patti on my email id parsekar9@gmail.com as it is required by Sales tax department
Thanks
Rachana
Hiii I have already shared a link above.. still sending one format for your over mail. (check your inbox)
Delete