Under the Central Sales Tax Act,1956
(in short CST), registered dealers are eligible for certain concession or
exemption of tax on inter-State transactions if dealer is able to comply with
certain conditions. Submission of statutory forms is one of such condition
which allows the dealer for concessional rate of tax. There are so many forms
like Form C, Form F, Form H, Form-I , Form E-I or E-II etc. etc.However before
dealing with the procedural issues involved in obtaining or submitting these
Forms it is more important to understand few concepts like what is ‘ intra-State
transaction’ or ‘Inter-State transaction’ because once nature of transaction is
established, it would be very easy to know that whether VAT is applicable of
central Sales Tax (CST)and then procedural compliance can be done easily.
post available at www.tbauk.com
post available at www.tbauk.com
As
per constitution, tax on inter State sale/purchase can be levied only by Union
Government while tax on ‘sale within State’ can be levied by the State
Government.
In
general, sale where seller and buyer both are from same state is called as
intra state sale for example “ seller of Kanpur (U.P.) sells goods to a dealer
of Noida (U.P.)” but when buyer and seller are in different States, it is
Inter-state sales. For example a seller of Chennai (Tamil Nadu) sells goods to
dealer based at Allahabad (U.P.) however location of seller & buyer is
immaterial and both can be located in same State but goods should be moved from
on State to another.
Section
3(a) of the Central Sales tax Act, 1956 provides definition of nature of
inter-State sale. The said section reads as under:
A
sale or purchase of goods shall be deemed to take place in the course of
inter-State trade or commerce if the sale or purchase –
(a)
occasions the movement of goods from one State to another; or…."
The
section provides that if movement of goods from one state to another (i.e.
inter-state movement) happened because of pre agreed sale or as pre condition
of sale then such movement of goods shall be deemed to be inter-state
sale/purchase.
For
a sale to be an inter-State sale, it must satisfy three essential ingredients:-
(i)
There must be a contract
of sale, incorporating a stipulation, express or implied, regarding inter-State
movement of goods;
(ii)
The goods must actually
move from one State to another pursuant to such contract of sale, the sale
being the proximate cause of movement; and
(iii)
Such movement of goods
must be from one State to another State where the sale concludes.
Where
the transaction of sale/purchase stands completed within the State and the
movement of goods takes place thereafter independently of the contract of sale,
the transaction would not have an inter-State element. Where the movement of
goods is the result of a covenant in the contract of sale or is an incident of
the contract, the sale may be regarded as an inter-State sale and it is
immaterial whether the property in goods passes in one State or another. What
is important is that the movement of goods and the sale must be inseparably
connected. It is not necessary that there should be an existence of contract of
sale incorporating the express or implied provision regarding inter-State
movement of goods.
(Bold
matter is from the decision given by Hon’ble High court-Chhattisgarh)
In
CST v. Suresh Chand Jain - (1988) 70 STC 45 (SC),
Hon’ble Supreme Court held that a sale can be said to be in the course of
inter-state only if two conditions concur viz.
(i)
sale of goods and
(ii)
a transport of those
goods from one State to another.
Thus
transaction must be a completed sale. Location of buyer and seller is
immaterial. Thus, even if buyer and seller are within the same State, sale will
be inter-state, if sale occasions movement of goods from one State to another.
e.g. the buyer may have construction site in another State and may ask seller
to dispatch goods directly to the site.
Thus
in conclusion it can be inferred that:-
(i)
There should be sale of
contract
(ii)
There must be movement
of goods from one State to another in pursuance of such contract
(iii)
Seller & buyer may
be located in same State and it will not affect the nature of transaction
In
next post, I will try to take some issues on “nature of Form C and it’s
procedural compliance”