Central Sales Tax (CST) is a tax on Sale levied by Central Government under the provisions of Central Sales Tax Act, 1957. As per the provisions of this Act, any movement of goods from one State to another on account of :-
(a) sale/purchase, or
(b) Transfer of document of Title to goods between two separate parties is considered as Interstate sale/purchase.
All such transactions are liable to CST.
Any movement of goods otherwise than as sale (i.e. stock transfer to Branch, Depot, Consignment Agent or for Job work etc) , sent outside the state , is exempted from levy of CST.
Any movement of goods, sent outside the country , is exempted from levy of CST. Example Exports, or Deemed Exports.
Also some of the Interstate transactions are exempted if goods are supplied to Special Economic Zones or to UN or Diplomatic missions etc.
The basic CST Rate as applicable to inter-state transactions is @2% but this basic rate or exemption from CST would apply if purchasing dealer issue the prescribed statutory forms to the selling dealer.
· For an inter-state sale to a registered dealer against declaration Form (i.e. form C) , the rate of CST is 2% or local VAT rate whichever is lower.
· Under the local VAT law, if the sale or purchase is exempt or Nil, the rate of CST applicable in case of sale to unregistered dealer or registered dealers, will also be exempt or Nil.
· The Sales Tax rates applicable for sale of declared goods, w.e.f 1-4-2007 is as follows:
o The sale of declared goods made to registered dealer, will attract levy of CST at local sales tax rate or 2%, whichever is lower.
o The inter-state sale made to unregistered dealer, will be liable to CST at rates which is equal to VAT/sales tax rates as applicable within the State.
o Declaration Forms for CST Transactions
During the course of Inter-state sale/purchase a Registered Dealer needs to issue/receive certain declarations to avail concessional rate of tax or exemption from tax, these declaration forms are C, E1, E2, F, H, I and J.
Sl.No. | Form | Purpose |
1 | C | To Avail concessional Rate of Tax @2% |
2 | E1 | Exemption from tax in case of CST sale in Transit (subsequent sale) |
3 | E2 | Exemption from tax in case of CST sale in Transit (Further subsequent sale) |
4 | F | Exemption from Tax in Stock Transfer to Branch, Depot, Consignment agent etc. |
5 | H | Exemption from tax in case of Deemed export sale |
6 | I | Exemption from tax in case of CST sale to SEZ Developer/SEZ Units |
7 | J | Exemption from tax in case of CST sale UN, Diplomatic Mission etc. |
These forms are printed and supplied by the Registered Dealer’s respective Tax assessing authorities (generally the CST assessments are done by VAT assessing authorities). These forms are to be prepared in triplicate. All the Types of Statutory Forms and their usage is explained as below:-
Form C
All the registered dealers will issue 'Form C' at the time of purchasing goods from another registered dealer. The issue of 'Form C' by the purchasing dealer will ensure that the goods being purchased are covered under his registration certificate and the CST can be charged at lower rates by selling dealer. The selling dealer, on the basis of this 'Form C', charges CST @ 2% or lower rate as applicable and submits the same to his assessing authorities as a proof or cause for lower collection of CST.
For example: Assume that the local sales tax rate is 4%. The sales made in the course of interstate trade, will attract levy of CST at the rates as applicable for local sales. But for any registered dealer on submission of declaration in 'Form C', the CST will be charged at 2% (4% or 2% whichever is lower). Otherwise dealer will be required to pay CST at local sales tax rates (@4%) if 'Form C' is not issued.
à The submission of Form C is mandatory and one Form can cover all transaction in each Quarter
à Separate Declaration of Form C required for each Quarter.
à Submission of Form C on quarterly basis to the Commercial Tax Authority is mandatory.
Form E1
Form E1 is used for making subsequent sales in the course of interstate sale/purchase by the first or original purchaser of goods. This Form should always be accompanied with 'Form C'. The Form E1 is used for first subsequent sales by transfer of document of title to goods.
Form E1 is issued by the selling dealer to the dealer who is making subsequent sales for claiming the exemption from payment of CST to the subsequent buyer. The first subsequent seller of goods receives 'Form E1' and submits it to the department to claim exemption from CST for any sale made to other interstate registered dealer.
Form E2
Form E2 is used for claiming the exemption from payment of CST. In case where the registered dealer purchases goods from one registered inter-state dealer and sells the same while in transit, to another registered inter-state dealer, the sales will be exempted from CST on submission of 'Form E2' to the department. The 'Form E2' is used to claim exemption from payment of CST to the seller who is a subsequent or last inter-state dealer of goods.
Form F
Form F is used for claiming exemptions on the interstate movement of goods as Stock/Branch Transfer, transfer to consignment agent or goods sent outside the state for job work also. The 'Form F' is issued by the Branch or Agent who is receiving goods from another state to the Transferor of goods. The transferor of goods can claim exemption from CST on submitting the Form to the department.
This 'Form F' is compulsory for claiming the transfer as Stock/Branch Transfer and no Tax/CST will be paid. In the absence of 'Form F', all such transfers will be treated as normal interstate sales and CST will be levied at the rate applicable. The Dealer has the option to submit one 'Form F' for all the interstate Stock/Branch Transfer for a month with supporting annexure if required.
àOne Form F for one month is required while Form C can cover transactions for the quarter.
à The submission of Form F is mandatory .
à Separate Declaration in Form F required for each Month.
à Submission of Form F on quarterly basis to the Commercial Tax Authority is mandatory.
Form H
Form H is used by the seller for claiming the exemption on making penultimate sales (immediately preceding sale to exports). Sales made during the course of export are exempt from CST. The penultimate sale is also deemed to be in course of export and is exempt from CST. The dealer exporting goods will have supporting documents like customs documents, bank certificate, airway bill/bill of lading, shipping bill etc. However, the penultimate seller will not have any direct evidence to prove that the sale made is exempt from tax. In such cases, the actual exporter has to issue a certificate to the penultimate seller in form H.
àProvisions applicable to Form C are applicable to Form H also.
Form I
Form I is used for claiming the exemption from CST on the sales made to any Special Economic Zone (SEZ). The buying dealer issues 'Form I' to the selling dealer. The selling dealer needs to submit the same (Form I) to the department to claim all the export benefits available to original exporter in SEZ area.
àProvisions applicable to Form C are applicable to Form I also.
Form J
Form J is used for claiming the exemption of CST in case of Interstate sales made to any United Nations, Diplomatic Missions etc. The Form is issued by purchasing dealer to the selling dealer. The selling dealer submits this Form to the department to claim the exemption.
1 comment:
NIce read was helpful for my work today.. thank u sir
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