I made an effort to understand the concept of Inter-State Sale/purchase under Central sales Tax Act, 1956 (CST)in my last post.Now going to discuss Form C:-
“In my next attempt ,I will
try to discuss and cover requirement of Form F.”
State
Government cannot levy the tax on inter-State Transactions however all such
transaction are administered by the State Government that’s why provisions
relating to State’s VAT in many situations are applicable even in such
transactions.
Although
CST Act 1956 is on the verge of its end with the advent of GST as it is
knocking at the door even since long and waiting to change the whole picture of
Indirect Taxation in India. But still it is worth to understand & keep the
discussion continue relating to the Form-C because of the fact that lot of
assessment are pending for completion.
As
per section 8(1) (b) of CST Act 1956 sales tax liability on inter-state sales
is @ 2% or ‘rate of tax for sale within State’ whichever is lower, provided
such sale is affected to a registered
dealer and goods are covered in the
registration certificate of the purchasing dealer. Otherwise the rate of tax would be the rate
which is applicable on the goods sold within that State.
Thus
CST rate @2% (i.e. concessional rate) can be claimed if :-
(i)
Sale has been
made to registered dealer; and
(ii)
Goods sold are covered in the registration certificate (RC)
of the buying dealer.
Such
concessional rate of tax would be applicable if selling dealer produces the proof
to Tax authorities that the purchasing dealer is eligible to get these goods at
concessional rate. Form C is the evidence which is provided by the buying
dealer to selling dealer for the said purpose, section 8(4)(a) of the Act
provides that concessional rate is applicable only if purchasing dealer submits
a declaration in prescribed form C to selling dealer.
Thus
inclusion of goods or class of goods in the RC has
important role and it must be included in RC before the goods are actually
purchased and such goods must be of nature which is allowed under section 8(3)
of the Act.
As per the section
following type or for following purpose goods are eligible for the inclusion in
RC.
Purpose for which Goods can be purchased under concessional rate (Ref;Sec 8(3))
(i)
Goods as being intended for re-sale
(ii)
For use in the manufacture or processing of goods for sale,
(iii)
For use in telecommunication network or in mining or
(iv)
For use in
generation or distribution of electricity or any other form of power
(v)
Container or other
materials intended for the packing of goods for sale ( i.e. primary
packing materials )
(vi)
Container or other materials used for packing of any goods
mentioned in para (i) or (iv) above (
i.e. Secondary packing materials)
Whether
Goods need to specified in Registration certificate
Yes, such goods can be purchased, only if these are mentioned
in the registration certificate of purchasing dealer. It is a mandatorily
condition to avail concessional CST purchase.
Dealer should give
complete list of product dealt with by him to the department while filing
application for registration or for amendment in RC and he can also submit the
soft copy of the list on the CD so that the same details can be uploaded by the
department because in most of the States information is uploaded online now a
days.
When
goods should be get inserted in RC?
Before the goods are
purchased. The goods must get included in the certificate of
registration, before the goods are actually purchased. There are instances
where even if the insertion is made at a later date but application for
amendment in RC moved before purchase and the Courts have held that the
amendments in R C should be from the date of application.( Orient paper mill 23 STC 308(MP) and 97 STC 102 (Pat FB))
Number of Transactions per C forms
One
declaration in C form can cover all transactions in one quarter, irrespective
of total amount/value of transactions during the quarter. (Quarter means period
of three months). If a transaction covers more than one quarter, separate C
form is required to be issued for each quarter.
Whether Form C can cover transactions for more than
one quarter?
In
general ,answer is no but The Hon’ble Gujrat VAT Tribunal in the case of
Sainest Tubes Pvt.Ltd Vs State of Gujrat SA NO.431/2001 judgment dated
25.03.2010, directed to authorities that if applicant produce “C-Form” covering
transactions of more than one quarter, the same will be considered to be legal
and valid and in accordance with law.
Whether submission of Form is mandatory?
Yes,
it is mandatory and no concession can be availed unless Form C is submitted.
Whether state Government can waive or relax from
submission of the Form-C.
No,
section 8(5) of the Act empowers the state government to provide relief or
exemption from tax on inter-State transaction but State Government cannot waive
or relax from fulfillment of compliance of Form C because it may give relief to
dealer only on fulfillment of requirement of section 8(4).
Sale made to dealer located in SEZ
Sale
would be exempt from tax If Inter-State sale has been made to dealer located in
Special Economic Zone (SEZ) (i.e. SEZ Units), but Form-I (instead of
form C) need to collected from SEZ unit. [ref :sec-8(6),8(7),8(8)]
Original, Duplicate and Counterfoil copy of C forms
The
C form has been prescribed in three parts Original, Duplicate and Counterfoil.
All three parts are identical in contents.
Section 8(4) of
and Rule 12(1) do not say that which part of C form should be produced before
the assessing authority but State law in many states requires producing
original copy of the Form C to tax Authority. It is the form itself which by
use of the words ‘Original’ ‘Duplicate’ and ‘Counterfoil given to Assessing
Authority gives an impression that original copy should be given to assessing
Authority. Rules show that even when the
"Original" C Form is lost the Assessing Authority, on the basis of
indemnity bond may proceed with the assessment for giving the benefit of
exemption under Sub-section 4 of the Section 8 of the Central Sales Tax Act,
1956.
When to submit the C form with the authorities by the selling
Dealer
As
per rule 12(7) C form can be submitted to the assessing authority within three
months after the end of period to which it relates.
Whether Government department can issue Form C for
it’s purchase
No, unless the department is
a registered dealer. In the absence of Form C Government Department will not
get any concession and may be liable for full rate of tax.
Date of Invoice or date of receiving material for
issuing Form-C
It is a practical problem
that goods is dispatched by the selling dealer in quarter while same is
received to buying dealer in next quarter, particularly when goods dispatched
on last week of the any quarter. For example, Goods dispatched on December 28,
2013 may reach its destination on or after 1st January 2014 (date falling
in next quarter).
In such situation, what would
be the date for issuing of C forms under CST Act, 1956 i.e whether date of
invoice or the date on which goods are received by the purchasing dealer?
The usual practice among all
the dealers is that seller books his sale in his books of account on the date
when invoice is issued, whereas, the purchaser books same purchase of goods in
his books of account on the date when he actually receives such goods.
In such case it is obvious
for the purchaser to issue C form according to the date on which he received
the goods as on such date he enters such purchase into his books of account.
In such cases the question
is what is the correct date of inter-state sale for the purpose of issuance of
C form. The simple answer to this question is that C form is to be issued after
the sale transaction is completed. Sale of goods gets completed when transfer
of property in goods takes place.
Section 19 of the Sale of
Goods Act provides: “Where there is a contract for the sale of specific or
ascertained goods, the property in them is transferred to the buyer at such
time as the parties to the contract intend it to be transferred.”
Therefore the crucial date
for the issuance of C form will be the date on which transfer of property in
goods takes place i.e when the title of goods gets transferred in the favour of
purchaser i.e when the sales gets completed. When the transfer of property in
goods takes place is a question of fact depending upon the terms of the
contract and intentions of the parties. It can be inferred that so long as the
transfer of property in goods does not take place, the sale does not get
completed. The crucial date when sale gets completed is the date when the title
passes.
C form is to be issued only
for a completed transaction of inter-state sale and therefore date for the
purpose of issuing C form will be the date when sale gets completed.
When the transfer of
property in goods takes place and consequently sale gets completed, is a
question of fact and is to be decided on the basis of intentions of the parties
and the terms of the contract
In States like Andhra
Pradesh or Maharashtra there are circular clarifying on the issue, which
accepts that Form can be accepted as valid based on the date of dispatch or date
of receipt of goods.
The
primary objective of ‘C’ Form is to ensure that goods are dispatched to other
States and same on accounted for by the dealer of other States. As long as this
primary object is met, ‘C’ form can be accepted as valid. Accordingly it is
clarified that Form-C can be accepted as valid relating to goods delivered in
quarter, based on the date of dispatch or date of receipt of goods in other
State or date of invoice or combination of all the three. (Ref:-AP-VAT Circular
CCT’s
Ref. No.IST/D1/ OUT/ 31/2012 Dt: 10 -05-2012.)
