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Registration under CST Act

CST Act makes provisions for registration of dealer. Registration brings many advantages e.g. the dealer
can issue ‘C’ form and purchase goods at concessional rate.

Compulsory Registration under CST - Section 2(f) states that 'registered dealer' means a dealer who is
registered under section 7 of CST Act. As per section 7(1), every dealer liable to pay Central Sales Tax has
to register himself with sales tax authority. As per section 6(1) of CST Act, every dealer effecting sale in
the course of Inter State trade or commerce is liable to pay CST. Thus, only those dealers who ‘effect’
inter state sales are required to register under CST Act. ‘Effect’ means ‘bring about, accomplish, cause to
exist or occur’ [Concise Oxford Dictionary 1994 edition]. Thus, intermediaries like agents, transporters etc.
who only facilitate sales are not required to be registered, as they do not ‘effect’ sales.

Central Government has authorised State Governments to prescribe State Sales Tax authorities authorised for the
purpose of registration. Thus, registration under CST Act is done by State Sales Tax authorities who are authorised
for the purpose.

Voluntary Registration - A dealer registered with State sales tax authorities may voluntarily apply for
registration under CST Act even if he is not liable to pay Central Sales Tax [section 7(2) of CST Act]. He
is entitled to apply for registration even if goods sold or purchased by him are exempt under State sales
tax law. This application for registration can be made any time. This provision is mainly useful when the
dealer makes purchases in Inter State but all his sales are within the State. Thus, he is not liable for
payment of any CST. However, he can make purchases in Inter State at concessional rate only if he is
registered. Hence, he can register even if he is not liable to pay any CST.

Application for registration - Application for registration should be made in prescribed form ‘A’ as per
CST (Registration and Turnover) Rules; within 30 days from the date when dealer becomes liable to CST.
Application fee of Rs. 25 is payable (by way of court fee stamps). Application has to be signed by (a)
proprietor of business (b) one of the partners in case of business owned by partnership firm (c) Karta or
Manager of HUF (d) director or principal officer of Company (e) principal officer in case of association of
individuals or (f) officer authorised by Government in case of Government.

Additional Places of business - If a dealer has places of business in different States, he has to obtain
separate registration in each State. However, if he has more than one places of business within the same
State, he has to get only one registration with additional places of business endorsed on the Certificate.
Definition of 'place of business' has already been explained in earlier chapter.

Security from dealer under CST Act - As per section 7(2A) of CST Act, the Registering authority can
ask for proper security from the applicant for (a) realisation of taxes due and (b) proper custody and use
of forms (like C, E-I/E-II, F and H) which are supplied by Sales Tax authorities for use by the dealer
[section 7(2A)]. Additional security can also be demanded from a dealer who is already registered [section
7(3A)]. Security cannot be demanded without granting opportunity of personal hearing. The security
should not be more than estimated tax liability for the current year i.e. year in which security/additional
security is demanded [section 7(3BB)]. Security may be in form of surety, execution of a bond, by deposit
of Government securities or by way of cash deposit. Demanding security is not essential. Moreover,
security demanded should be reasonable and for good and sufficient reasons.

The security can be forfeited, after giving personal hearing, if the CST due is not paid by dealer or the
blank sales tax forms issued to him are misused [section 7(3D)]. After such forfeiture, additional security
has to be furnished. If such additional security is not furnished, sales tax authority may not issue further
blank sales tax forms.

The security can be refunded, partly or wholly, if, sales tax authorities are of opinion that such security is
not required.
Order demanding security or additional security or not refunding security is appealable. Appeal should be
filed within 30 days. The appellate authority can condone the delay in filing of appeal, if sufficient cause is
shown [section 7(3H)]. There is no further appeal against the order of Appellate Authority and the order
passed by Appellate Authority is final [section 7(3J) of CST Act].

Other documents required at time of registration - Other documents required at the time of
registration vary from State to State. Normally, following are asked for - (a) Particulars of Directors/
partners (b) Copies of articles of association, memorandum in case of company and partnership deed if
applicant is a firm (c) Copies of rent agreements (d) Nominations as Manager (e) List of places of
business, godown (f) Details of machinery (g) Details of bankers (h) Photographs of directors / partners.

Certificate of Registration under CST - The registering authority will ensure that application is in
conformity with provisions of CST Act. He can make necessary enquiries e.g. (a) particulars given are
correct (b) Materials requested for registration are eligible for inclusion and the goods are in fact needed
for the business. After he is satisfied and after obtaining required security, the dealer will be issued a
Certificate of Registration in prescribed form ‘B’. A copy of the same will be issued for every additional
place of business in the State. This certificate should be kept at principal place of business and a copy of
the certificate should be kept at each additional place of business in the State.

AMENDMENT OF CERTIFICATE - The certificate can be amended e.g. change of name, change of
business, change of class of goods in which he carries business, change/addition of place of business,
warehouses etc. This amendment can be made on application from dealer or by sales tax authorities
themselves after giving notice to dealer. In Orient Paper Mills v. CST - (1969) 23 STC 308 (MP HC), it
was held that the amendment will be effective from date of application for amendment - quoted with
approval in Larsen and Toubro Ltd. v. CCT - (1995) 97 STC 102 (Pat HC FB). [In view of SC judgments
cited above in respect of effective date of registration, these decisions appear to be correct].

All items of purchase and sale must be included in Registration - The ‘Registration certificate’ is
indeed very important. As per section 10(c), false representation when purchasing any goods that the
class of goods are covered by the registration certificate, is an offence. As per section 10(a), furnishing a
false certificate is an offence. Thus, while issuing ‘C’ form or other forms under the Act, it must be
ensured that goods are covered in the Registration Certificate. This is particularly so because there is no
provision to amend the Registration Certificate with retrospective effect.

Cancellation of CST Registration - Registration can be cancelled either on request of dealer or suo
motu by sales tax authorities.

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