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Basics of CST
Concept of CST
The concept of Central Sales Tax is closely related to the concept of
taxation in the Constitution. Under the constitution, taxation of sale and
purchase of goods is a State subject except sale or purchase of goods in
CST is applicable only when following conditions are satisfied:There should be a Dealer
He should be a Registered Dealer under the CST Act
He must carry on any business
Sale should take place in the course of inter-state trade or commerce
Sale must be of goods defined under CST Act
EXCEPTION
The exception is sale, supply or distribution of unserviceable or old stores or
waste products or accessories.
INTER-STATE SALE
SECTION-3
INTRA-STATE SALE
SECTION- 4
OCCASIONS THE
MOVEMENT OF GOODS
SEC. 3(a)
EFFECTED BY TRANSFER OF
DOCUMENTS OF TITLE TO THEGOODS
SEC. 3(b)
Clause (b) on the other hand contemplates a sale where the property in the
goods sold passes by transfer of document of title during the movement of the
goods from one state to another.
A regd dealer claims that he is not liable to pay CST on the ground that
movement of goods from one state to another was occasioned by reason of
transfer of such goods by him to any other place of his business or to his
agent or Principal, & not by reason of sale, the burden of proving so shall be
on such dealer
The dealer to whom the goods are transferred (Transferee) will furnish a
F Form to the sender of goods. A single form will cover transactions made
during a calender month.
The Transferee/receiver of goods can obtain F from his sales tax authority
on payment of 21/-. Now e- form is applicable.
.
He will give original & Duplicate copies to the Transferor/Sender & will
retain the Counterfoil. The sender will hand over Original to the assessing
authority alongwith a Statement in Form C within 3 months from the end
of period to which the declaration relates. [ u/r 12 of CST(R&T) Rules & u/r
6C of CST(O) Rules].
While filing returns for the month/qtr ending 30th June,30th Sept, 31st
Dec & 31st March, the transferee/receiver will submit a Statement & Forms
received for the transactions made in the Qtr preceding the Qtr for which
the Return is filed [ u/r 7A of CST (O) rules].
He will be entitled to ITC ( 13,500- 4000/-) = 9,500/ because excess of 4% will be allowed as ITC u/s 20(3)(e)
Information will be given in Annexure I in VAT-201.
If goods purchased are sent on Stock transfer partially, ITC shall be allowed
proportionately
SALE BY TRANSFER OF DOCUMENTS OF TITLE OF GOODS [as U/s 3(b) & u/r
6(2).
Transit Sale ( subsequent sale)Basic requirements are: The first requirement of a transit/subsequent sale is that there must be a
relative prior sale which had either occasioned movement of goods or was
effected by the transfer of documents of title to goods
There must be movement of goods from one State to another before any
contract of sale or agreement to sell have been made.
Such transfer of title documents must take place while the goods are still in
movement or transit
A Document of title to goods, bears internal evidence of ownership of goods
by holder of document.
(RR) in case of transport by rail, bill of Lading (BL)in case of transport by sea,
Airway bill (AWB) in case of transport by air.
Where a sale in course of interstate trade has either occasioned the movement
of such goods from one sate to another or has been effected by a transfer of
documents of titles to such goods during their movement
Registration u/s 7 of CST Act read with rules 3 to 8 of CST (R&T) Rules
U/s 7(1) of the CST Act - When a dealer in Odisha effects interstate sale for any
amount, he is liable to pay CST & is required to obtain RC both [compulsory
regn under the VAT Act u/s 10(4)] & u/s 7(1) of CST Act
U/s 7(2) of the CST Act - When a dealer in Odisha is liable to pay VAT even if
he does not effect interstate sale, he is required to obtain RC compulsorily
under the VAT Act u/s 10(4) & may obtain RC u/s 7(2) of CST Act
Application for regn u/s 7(2) shall be made within 30 days & application u/s
7(1) can be made at any time, in Form A prescribed under CST (R&T) Rules
[u/r 3]
R.C. Shall be issued in Form B prescribed under CST (R&T) Rules & will bear
TIN issued under VAT Act.
Before grant of RC he is required to pay security equivalent to tax payable
for a year [ u/s 7(2A) & u/r 3(2) of CST (o) rules]
Return Defaults
1. Levy of Interest for delayed payment or non-payment of tax [u/r 8 of
CST (O) rules]
Interest is 1% of such tax or differential tax or full tax respectively, per month
from due date of Return to date of payment or date of assessment order,
whichever is earlier.
Such interest shall be paid at the time of making payment of tax or the date
specified in demand notice as per the order of assessment whichever is earlier
revised, he may be directed to pay in addition to such tax & interest, a penalty
@ 2% per month on the tax & interest, from the date it had become due to the
date of its payment or order of assessment whichever is earlier, after issuing a
show cause Notice in form Form III
In case of failure to explain or respond, penalty shall be imposed & Demand
notice shall be issued in FormVII
Sec. 6 (2) of CST Act says when goods are in movement from one state to other in pursuance a
contract of sale, then any subsequent sale effected by transfer of documents during such movement
shall be exempt from CST. The first requirement of a subsequent sale under section 6(2) is that it
must have a relative prior sale in the course of inter-state trade or commerce which had (a) either
occasioned the movement of such goods from one state to another, or (b) was effected by transfer of
document of title of such goods during their movement from one state to another. In other words, a
movement of the goods in pursuance to a prior sale is the first pre-requisite of a subsequent sale
contemplated by section 6(2) for enjoyment of exemption. e.g. 1.) A of Delhi Orders B of Haryana
to sell and dispatch to Delhi 50 bags of black paper. B dispatches the goods and send the railway
receipt to A. In the mean time, A had sold identical quantity of same goods to C of Delhi. Instead of
himself taking delivery of goods from railway and then delivering those goods to C at Delhi, A
transfer to C the railway receipt which was sent to him by B. The sale by A to C is an inter-state sale
because it was effected by a transfer of document of title, viz. railway receipt. If C is registered
dealer, the sale from A to C may enjoy exemption from tax on fulfillment of other conditions of
section 6(2), e.g. The production by A of prescribed certificate and/ or declaration etc. The dealer
had entered into a contract with a supplier in the same state and had furnished C form to the
supplier and directed him to deliver the goods to the petitioners customer in another State. It had
obtained forms E1 forms its supplier and C form from customer state. Under section 6(2), the
second sale so effected by the petitioner was to be exempted and the petitioner was entitled to that
exemption as in respect of those transactions, form E1 from the supplier and C forms from customer
had been produced. - See more at: http://taxguru.in/goods-and-service-tax/subsequent-sale-saletransit-cst-act-1956.html#sthash.tieYWhly.dpuf