Transcript Presentation

WELCOME
Central Sales Tax
An Overview
dated the 17th December 2014
By Rakesh Garg, FCA
1
Rakesh Garg, FCA
Type of Taxes On Sales in India
Sales Tax
Intra-State or Local –
Movement of goods
within a State –
called as VAT– Entry
No. 54 / List II / Sch.
VII of COI
Inter-State –
Movement of goods
from one State to
another – Called as
CST – Entry No.
92A/ List I / Sch. VII
of COI
2
Rakesh Garg, FCA
Purposes of Central Sales Tax Act
•
CST Act derives powers from entry 92A / List 1 / Sch. VII of
C.O.I read with Article 269 & 286 reads as “Taxes on sale or
purchase of goods other than newspapers, where such sale or
purchase takes place in the course of inter-State trade or
commerce”
•
The Parliament had passed the CST ACT with a view to -
1. Formulate the principles for determining as to when a sale or
purchase of goods takes place -
(i) in the course of inter-State trade or commerce; or
(ii) outside the State; or
(iii) in the course of import in India or export from India.
3
Rakesh Garg, FCA
Purposes of Central Sales Tax Act
2. To provide for levy of collection and distribution of taxes
on sale of goods in the course of inter-State trade or
commerce;
3. To declare certain goods of special importance in the
inter-State trade or commerce;
4. To specify the restrictions and conditions in respect of
State laws which impose taxes on the sale or purchase of
such goods of special importance.
It is not a tax on inter-State movement; it is a tax on “sale”
which is deemed to have takes place in the course of
inter-State movement.
4
Rakesh Garg, FCA
Structure of Central Sales Tax Act
•
CST is an Act of the Parliament
•
It contains Seven Chapters with 26 sections
•
Chapter II formulates principles when a sale is termed as
inter-State sale, export or sale in the course of import
•
Chapter III contains the charging section and exemption to
stock transfers and subsequent sales (subject to conditions)
•
Ch. III also contains provisions for Registration,
Determination of Turnover, Rate of Tax and Penalties
•
Chapter IV contains list of declared goods and restriction on
States in respect thereof
•
Ch. VA and VI relates to resolving disputes between two
States in respect of levy and situs of tax
5
Rakesh Garg, FCA
Structure of Central Sales Tax Act
•
Sec. 13(4) read with Art. 269 of COI – CST is collected and
assigned to the State, who collects the same
•
Rates of CST depends upon the relevant State VAT Rate
•
Central Sales Tax (Registration & Turnover) Rules by the
Central Government containing Rules for -
•
•
Registration, Amendment and Cancellation of RC
•
Obtain, issue & maintenance of Central Statutory Forms
CST (State) Rules prescribe various procedures and Returns –
As per Section 13 of the CST Act, all procedures including
returns, assessment, interest & Penalty – State VAT
Procedures to apply
6
Rakesh Garg, FCA
Central Sales Tax Act – In Brief
•
It is a tax on sale
•
It is not a tax on inter-State movement
•
Though it is a Central Tax – But it is collected and retained by
the State from where movement of goods commences
•
“Sale” of goods shall be deemed to take place in the course of
inter-State trade or commerce, if
•
Occasions the movement of goods; or
•
Transfer of documents of title during movement of goods
•
A sale within the State, which is not an inter-State sale or
export or import, is a ‘intra-State sale’
•
Tax generally depends upon location of goods – That is, state
where invoice is raised is immaterial
7
Rakesh Garg, FCA
Meaning of “Sale”


Meaning of sale (Sec.2(g)) and its ingredients  Two persons
 transfer of property in goods by one person to another
 For cash or deferred payment or any other valuable
consideration.
Six types of deemed sales also included in definition of sale  Transfer of property otherwise than sale
 Hire Purchase – at the time of delivery of goods
 Goods involved in Works Contract
 Transfer of right to use goods (Leasing)
 Supply by Clubs and association to its members
 Supply of food and beverages along with services
8
Rakesh Garg, FCA
Central Sales Tax – Meanings of Terms

Sale price is defined in sec. 2(h)
“sale price” means the amount payable to a dealer as
consideration for the sale of any goods, less any sum
allowed as cash discount according to the practice normally
prevailing in the trade, but inclusive of any sum charged for
anything done by the dealer in respect of the goods at the
time of or before the delivery thereof other than the cost of
freight or delivery or the cost of installation in cases where
such cost is separately charged

Freight & Insurance – Tax to be levied on sale price Whether
form part of sale price – India Meters Ltd. – 34 VST 273 (SC)
9
Rakesh Garg, FCA
Central Sales Tax – Meanings of Terms

Meaning of “goods” u/s 2(d) – Movable Goods
“goods” includes all materials, articles, commodities and
all other kinds of movable property, except newspapers,
actionable claims, stocks, shares and securities

Taxable event of sale – At the time of transfer of ownership Necessary for accounting, CST returns and issuance of forms

Deeming fiction – Inter-State sale to override over local sale

Purpose of section 3 is to define inter-State sale, even
though sale completes in accordance with section 2(g) and
even though the situs of sale will fall in one of the State
10
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sale occasions movement from one State to another – 3(a)
The Supreme Court, in the case of Balabhadas vs. State of
Orissa (1976) 37 STC 207, pointed out the following
conditions for treating a sale as an inter-State sale: (A) There is an agreement to sell which contains a stipulation,
express or implied, regarding the movement of the goods
from one State to another;
(B) In pursuance of the said contract, the goods in fact moved
from one State to another; and
(C) Ultimately a concluded sale takes place in the State where
the goods are send which must be different from the State
from which the goods moved.

11
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sale occasions movement from one State to another – 3(a)

Agreement to sell for movement of goods from one State to
another, either express or implied;

Physical Movement of goods from one State to another –
Mere passing through another State is not enough;

Sale to conclude in the Other State;

Property may pass in either State.

No difference between existing goods & unascertained
goods – SC – Two mixtures moving from other State, Mixed
and delivered at the buyers place - ISS
12
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sale occasions movement from one State to another –
3(a)

Purchasers coming from other States – Counter Sale – Can
it be ISS – Depending upon facts – Goods must move from
one State to another in pursuance of contract of sale

Parties within the State; Goods dispatched to some other
State as per contract - An ISS Sale (STC, Orissa) – However,
use section 6(2) to avoid double CST (2%)

Unfructified Sale – Not taxable
13
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sale occasions movement from one State to another – 3(a)

Personal delivery not barred – Telco (SC): DCM (SC); Co-op.
Sugar (SC); Motorads (Delhi); Pandiya Vishwanath (All)

Name of consignee on the GR – May be self

Significance of GR /RR - To substantiate the inter-State sale

Documentary evidences in the absence of GR/RR: 
Purchase Order,

Sale Invoice,

Entry Forms,

Toll Receipt, etc.
14
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sale occasions movement from one State to another – 3(a)

Interception of branch will not convert the inter-State sale
into local sale. (K.G. Khosla, IOCL, Sidhartha Apparel) –
Stock transfer vs. Inter-State sale
Sidhartha Apparels (P) Ltd. (2008) 13 VST 222 (CSTAA)
The appellant was manufacturer of the branded goods in
Chennai in the name of “park avenue”. On the facts, it was
held(a) When goods are packed in cartons for specific named
customers of other States, and moved to its branch of other
State for delivery to customers, it is an ISS from Chennai.
15
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(a)
Sidhartha Apparels (P) Ltd. (2008) 13 VST 222 (CSTAA)
(b) If goods have moved to outstation branch for the purpose of
effecting the sale in the routine course of its business as
when customer approaches to the branch, then the
mention of the customers’ name on the cartons would be
meaningless, and it would remain as stock transfer.
(c) Where goods are marked for outstation customer, but
ultimately sold to other customers since the original
customer did not take delivery of goods, it is not an interState sale from Chennai because goods had not moved from
Chennai at the instance of that new customer.
(d) If goods are marked for customers outside India, it will not
be treated as inter-State sale from Chennai.
16
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(b)
Sale by transfer of documents of titles during movement of
goods– 3(b) –

Meaning of “during movement of goods”

Meaning of “documents of titles” – G.R., L.R., R.R., B.L. etc.

Unfructified sale u/s 3(a) – Sec. 3(b) may be used

Transfer of goods by the dealer to his branch in other State;
and sale during movement by transfer of documents of title

ISS u/s 3(b) when seller and buyer are within same State

Time of transfer – Arjan Das (Delhi); P.U. Usha (Ker)
Clause (a) and (b) of Section 3 are mutually exclusive and
distinct – No chance of overlapping
17
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(b)
Sale by transfer of documents of titles during movement
of goods– 3(b) –

Property in goods must transfer during movement of goods

TISCO vs. R. Sarkar (1960) 11 STC 655 (SC) [also A&G
Projects (SC); Chem-Dyes (Guj)] - Sale contemplated by
clause (b) is one which is effected by transfer of documents
of title to the goods during their movement from one State
to another. Where the property in the goods has passed
before the movement has commenced or after the
movement from one State to another has ceased, it would
not be covered by clause (b) of section 3
18
Rakesh Garg, FCA
Central Sales Tax Act – Section 3(b)
Sale by transfer of documents of titles – 3(b) –

Manner of “transfer” –
 Endorsement or Delivery of documents - section 2(4) of the
Sale of Goods Act, 1930 as, “The phrase ‘Documents of title
to goods’ includes a bill of lading, dock-warrant,
warehouse-keeper’s certificate, wharfinger’s certificate,
railway receipt, warrant or order for the delivery of goods
and any other document used in the ordinary course of
business as proof of the possession or control of goods, or
authorising or purporting to authorise, either by
endorsement or by delivery, the possessor of the document
to transfer or receive goods there by represented
 Authorization letter - No
19
Rakesh Garg, FCA
Sale Outside the State

When a sale or purchase to take place inside a State, such
sale shall be deemed to be a sale outside all other States

When a sale is deemed to take place within a State: -


in the case of specific or ascertained goods, at the time
the contract of sale is made; and

in the case of unascertained or future goods, at the
time of appropriation
It is subject to the provisions contained in section 3
20
Rakesh Garg, FCA
Sale in the Course of Export

Section 5(1) of the Central Sales Tax Act: (i) Direct Export
(ii) Transfer of documents of title when Goods are in
movement

Goods must move from one country to another legally.

Property may pass in either country

Sale to foreign embassy in India or sale against foreign
exchange in India or sale at duty free shop in India is not
export.
21
Rakesh Garg, FCA
Penultimate Export

Section 5(3) has been enacted to extend the exemption from
tax liability under the Act, not to any kind of penultimate sale
but only to such penultimate sale, which satisfies, all the
following conditions:-
(a) Such sale to the exporter must be made after the
agreement by exporter with the foreign importer in
relation to such export is entered into;
(b) Sale must be made for the purpose of complying the
terms of an agreement in relation to an export, i.e., the
exporter must have the confirmed orders;
 Judgment by SC in Azad Body Builders
22
Rakesh Garg, FCA
Penultimate Export
Conditions for availing exemption (contd..)
(c)Same goods must be exported i.e., deduction under this
section is not available for raw material used in the
production of goods to be exported. However, packing and
re-packing of the goods does not alter the substance and still
exemption can be claimed u/s 5(3); and
(d)
Person making such sale shall obtain a certificate, in
form “H” in the CST Act from the exporter. Form H is
mandatory
23
Sale in the course of Import
Rakesh Garg, FCA

As per section 5(2) of the CST Act, a sale or purchase of goods
is deemed to be in the course of import of goods into
territory of India only if: (i) sale or purchase occasions such import; or
(ii) sale or purchase is effected by transfer of documents of
title to the goods before the goods have crossed the
custom frontiers of India.

The course of import of goods starts at a point when the
goods cross the customs barrier of the foreign country and
ends at a point in India after the goods cross the customs
barrier.
24
Rakesh Garg, FCA
Sale in the course of Import
FIRST LIMB – OCCASIONS THE MOVEMENT

Sale must occasion the import

There must be an integral connection or inextricable link
between first sale following the import and the actual import

An obligation to import may arise from statute, contract or
mutual understanding or nature of the transaction

Links between sale to the import, which cannot, without
committing a breach of statute or contract or mutual
understanding, be snapped

DISTINCTION – K.G. KHOSLA VIS BINANI BROS.

NTPC case by S.C. – Indure Ltd. – 34 VST 509
25
Rakesh Garg, FCA
Sale in the course of Import
SECOND LIMB - HIGH SEAS SALE

When the goods are sold before these cross the customs
frontiers of India, i.e. after crossing the customs barrier of
foreign country but before crossing the customs station of
India, these types of transactions are also covered by section
5(2) of the CST Act. These kinds of sale are popularly known
as “high sea sale”, where sale is effected by endorsement on
documents when the goods are on high seas.

Sale of imported goods at duty free shops beyond the
customs area - To be treated as High Seas Sale – SC in Hotel
Ashoka (3.2.2012)- To be applied to Bonded Warehouse also.
26
Rakesh Garg, FCA
Sale in the course of Import
Documentation - High Seas Sale
In every High Seas Sale transaction, following documents
should be raised / endorsed and delivered when the
consignment is on “HIGH SEAS” :a. Offer for sale of goods on high seas;
b. Acceptance of offer – agreement to sale;
c. Endorsed Bill of Lading in favour of buyer;
d. High Seas Sales Invoice in favour of buyer.
e. Bill of entry in the name of High Seas purchaser;
f. Payment of customs duty by the HS Purchaser.
27
Rakesh Garg, FCA
Subsequent Central Sales u/s 6(2)

What are E-I/E-II Transactions :• Two sales; First sale should be ISS either u/s 3(a) or 3(b)
and Second sale u/s 3(b);
• There must be movement of goods from one State to
another;
• Transfer of documents of title to the goods during
movement;
• Therefore, sale should take place before taking delivery
from transporter;
• Second sale must be made to the registered dealer.
• Generally, this section relates to sale of Standard Goods
28
Rakesh Garg, FCA
Subsequent Central Sales u/s 6(2)
29
Rakesh Garg, FCA
Subsequent Central Sales u/s 6(2)
What are E-I/E-II Transactions (contd…)

To claim full exemption, second seller must obtain -
Form E-I from the first seller; and
-
Form C from the subsequent purchaser.

In the absence of Form C, taxable at full rate;

In the absence of Form E (Form C received), concessional
rate.

Subsequent sale can take place within the State.

Subsequent booking – not allowed- Mahaveer Chemical
(2012) 49 VST 200 (Mad)
30
Rakesh Garg, FCA
Subsequent Central Sales u/s 6(2)
What are E-I/E-II Transactions (contd…)

Goods are exempt from VAT in the State of dispatch – Still
exempt in the state of second sale-Delhi HC in Mitsubishi Corp.

To avoid litigation – It must be a completed sale during
movement – Unconditional – To eliminate agreement of sale

Ideal procedure to be followed – GR should be in the name of
first purchaser – First seller would give his Invoice & Bill to the
first purchaser; who would give GR along with his Invoice to the
Second Purchaser
Pre-determined buyer vs. Pre-determined sale: …………
Judgment by Supreme Court in A&G Projects
MMTC -111 STC 434 (SC); J.V. Gokal – 11 STC 186 (SC)
31
Rakesh Garg, FCA
S.C. in A&G Projects
dt. 11.12.2008 (Read with Kar. HC)
Transaction of SPECIFIC goods or
Standard Goods with prior contract among A, B & C
or Goods dispatched by A directly to C
A
(Manufactr.)
(UP)
B
(contractor)
(supply + Installation)
or (Supplier) (Delhi)
C
(Contractee/
End User)
(Delhi)
Sale by A to B is 3(a) sale, without dispute
Sale by B to C is not 3(b) sale, Sec.6(2) not applicable
Sale by B is also 3(a) sale, taxable in U.P. (not in Delhi)
32
Rakesh Garg, FCA
S.C. in A&G Projects – Contd…
Transaction of STANDARD goods – No prior contract
between B & C; Goods sold in transit
A
(Manufactr.)
(UP)
B
(contractor in Delhi)
(supply + Installation) or
(Supplier in Delhi)
C
(Contractee/
End User)
(Delhi)
Sale by A to B is 3(a) sale, without dispute
B can issue Form ‘C’ to A
Sale/WC by B to C is taxable in Delhi as inter-State sale;
However can be exempted thr. E-I
33
Rakesh Garg, FCA
Subsequent Central Sales

Pre-identified buyers: Y obtained orders from buyer Z, outside the
State and entered into agreements of purchase with X, the
manufacturer - Delivery was to be given f.o.r. booking station.
Goods sold under these specific contracts were booked at a
specific railway station in Tamil Nadu to Z outside the State. X
never gave physical possession of the goods to Y and handed over
the documents of title to Y, who in turn endorsed in favour of Z.
Held that there were two sets of sales (i) sales by X to Y; and (ii)
sales by Y to Z. The second set, viz., the sales by Y to Z was ISS and
Y having furnished the requisite certificates was exempt from tax
u/s 6(2)(b). [Dharangadhara Trading Co. (1988) 70 STC 92 (SC);
Vinay Cotton Waste Co. (1986) 63 STC 391 (Mad); State of T.N. vs.
Hydels Engineers (P) Ltd. (2010) 35 VST 262 (Mad)]
34
Rakesh Garg, FCA
Subsequent Central Sales

Pre-identified buyers: The appellant, having its place of business in
State X, entered into an agreement with a mill situated within the
State Y for sale of cotton. The appellant, in turn, placed orders with
its sellers at Bombay for purchase. Bombay sellers despatched goods
to Mill as consignee and sent the RR to appellant, who endorsed the
same in favour of Mill. Appellant contended that the consignments
were sent directly by the Bombay seller to the mills and, therefore,
these were direct ISS by the Bombay seller to the mills and that the
property in the goods passed to the mills when the goods were
loaded at Bombay. However, it was held that the sale by the Bombay
seller to the appellant was an ISS u/s 3(a) and the transaction of sale
by the appellant to the mill may be assessed u/s 3(b). [G. A.
Galiakotwala & Co. (P.) Ltd. (1976) 37 STC 536 (SC-3J)]
35
Rakesh Garg, FCA
Stock Transfer u/s 6A
• Movement of goods from one State to another by a dealer to
his other place of his business or to his agent or principal;
• Goods would include even the consumables & capital goods
• Goods moving to out-state Godown
• Exempt against Form F – Mandatory
• Burden of proof with transferor– to prove whether • Goods are moving to the branch not in pursuance of sale
agreement with the third party
• the agent to whom goods are transferred is not a principal
buyer [i.e. transfer must be from ‘P’ to ‘A’]
• Amendment in the Central RC for addition of branch
• Goods need not be specified in the RC of transferor/transferee 36
Rakesh Garg, FCA
Stock Transfer u/s 6A
• Failure to Furnish Form F –
• Deemed as inter-State Sale
• Taxable Event – Date of dispatch
• If deemed as ISS (generally in the case of transfer to
agent) • Form C can be obtained from the transferee branch
even if they are same person – Provided the recipient
State considers it as ‘deemed purchase’ – And goods
are included in the RC of the transferee
• Value of Form F:
• Whether shortfall in the value of Form F and the sale
value be questioned by the AA of the receiving State
37
Rakesh Garg, FCA
Stock Transfer u/s 6A
• Maintain Records as prescribed in State CST Rules
• Documentary evidence : –
• 1. Dispatch proof;
• 3. Sale patti;
2. Agents records;
4. Agreement with agent;
• 5. Statement of account and Copy of ledger;
• 6. Conduct between the Parties
• Power of Reassessment to the AA on the ground of discovery
of new facts; and Revision to a Higher Authority on the ground
that the findings of AA are contrary to law [Sec. 6A(3)]
• Opportunity to furnish Form C , if stock transfer is rejected and
assessed as ISS (Sawhney Steel – SC)
38
Rakesh Garg, FCA
Stock Transfer u/s 6A
Inter-State transfers to Third Party for Job Work : • Sale pertains to those goods which are used in the contract by
the job worker and transferred to the contractee
• CST shall be charged by the job worker in the other State
• Form F shall be furnished in those cases also where goods are
transferred for processing or job work to other States –
Ambica Steel (All)
• Supreme Court, without interfering Ambica Steel, allows time
to submit forms
• Later, Allahabad HC in ACPL Jewels held that AA to complete
assessment on merits, if the assessee fails to submit forms
39
Rakesh Garg, FCA
Liability and Registration

If liable to pay CST - Mandatory Registration u/s 7(1)

As per sec. 6(1) – Subject to other provisions of the Act Liable to pay tax on ALL ISS except electricity energy

Voluntary Registration u/s 7(2) – Benefit of registration

If selling only the exempted (Schedule 1) goods locally and
in inter-State trade – No liability of CST registration

If making central purchases; No ISS –– No liability of CST
registration; Liable under State Act depending upon the
Taxable quantum based upon the State Provisions
40
Rakesh Garg, FCA
Liability and Registration

Rectification in RC - Items not allowed originally without
discussion – Rectification Application should be within
reasonable time; otherwise objection/appeal

Amendment in RC – Change in goods, traded, place,
ownership

Amendment – Suo moto (or) upon application

Effective date of registration / amendment relating to goods
– Relevant for issuance of Form C – Can amendment take
place retrospectively after paying late fee?

Power to ask for Security for registration/amendment
41
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
Issuance of Form C by the Purchasing dealer
•
Goods (or class of Goods) should be prescribed in RC of the
purchasing dealer
•
Purpose of purchase should also be specified in RC
•
Purchase after the date of registration/amendment
•
Purpose of purchase should be specified on Form C
•
Goods must be used only for that purpose
•
Special care must be taken in case of works contractors and
dealers engaged in transfer of right to use goods
•
Goods once included in RC – AA cannot object subsequently 116 STC 623 (Raj); 62 STC 374 (Raj); 5 VST 529 (SC)
42
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
Form C by the Purchasing dealer – Purposes
•
Resale
•
Manufacturing or processing of goods for resale
•
Mining
•
Telecommunication Network
•
Generation or distribution of electricity or any other form
of power
43
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
Issuance of Form C by the Purchasing dealer
Nature of Items – Rule 13 of CST (R&T) Rules :
• Raw materials,
• Processing materials,
• Machinery,
• Plant,
• Equipment,
• Tools,
• Stores,
• Spare parts,
• Accessories,
• Fuel or lubricants.
44
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
Issuance of Form C by the Purchasing dealer
•
•
•
•
•
•
•
•
Manufacturer - A process of activity is so integrally related to
the ultimate manufacture of goods so that without that
process or activity manufacture may, even if theoretically
possible, be commercially inexpedient – Yes - J.K. Cotton (SC)
Building Material by manufacturer– No
Delivery Vehicles / Trucks – Depends
Visicoolers (Refrigerators) for Pepsi – No
Electrical Equipment – Depends
Generator – If used for manufacture – Yes
Manufacture loss – Yes if normal ; Goods destroyed – No
Purchase of goods for manufacture of exempted goods - Yes 45
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
Issuance of Form C by the Purchasing dealer
•
Manufacturing in Other States – Yes
•
Purchase for future business – Yes
•
Fans, Coolers, Air-conditioners, Office Stationery, Books, Cars
used for office purpose – No
•
Packing Material specified in RC – Yes
•
Packing material (even if not specified in RC) for goods
specified in RC – Yes
•
Works contract ; Hire Purchase; Lease – Yes
•
Purchase of goods to be used for gift – No
•
Purchase of goods for sample – Depends – Ruby Lab (Guj)
46
Rakesh Garg, FCA
Form ‘C’ and Purchasing Dealer
•
Amount of C Form – Whether to include freight and sales tax
•
One form for transaction taking place in one quarter
•
Monetary limit of single form – No ceiling
•
If seller has booked sale in qtr. I and buyer in qtr. II and issued
form accordingly – Reconciliation
•
Form C can be issued from some other state where purchaser
is registered – If he is unregistered in purchasing State
•
Form F – Transactions in one month
•
Loss of form either by the purchaser or seller- Obtain
duplicate from the Department – Indemnity Bond in Form G.
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Rakesh Garg, FCA
Form ‘C’ and Selling Dealer
•
Duty to ascertain whether goods are specified in the RC of
the purchasing dealer – Take copy of RC
•
No duty to verify the use of goods by the purchaser
•
Single Form for sales made in multiple quarters - No
•
Furnishing of photocopies of the Form – Depends upon State
provisions
•
Furnishing of forms at the time of assessment as per State
Rules
•
Forms before Appellate Authorities – Sufficient Cause
•
Opportunity to remove defects in the Form
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Significance of Documents & Records
Rakesh Garg, FCA


Significance of documents, agreement and clause relating to
transfer of property in goods

Local sale vs. Inter-State Sale

Works contract vs. Normal Sale;

Works Contract vs. Leasing;

Leasing vs. Hire Purchase;

Sale in the course of import
Is raising of invoice – A conclusive evidence of sale - No
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Rakesh Garg, FCA
To Summarize

Decide whether the transaction is a sale in terms of definition
of the term “sale” (including stock transfers)

Whether it is Central sale (or) Export (or) Sale in the Course of
import

If it is central sale, then taxable under the CST Act. Place of
transfer of ownership is irrelevant

Ascertain whether it is exempt u/s 5(2), 5(3), 6(2) or 6A

If taxable, determine the rate of tax as per section 8

Pay tax and file the return as per the State VAT provisions

Take benefit of Form C and others forms as per the law
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Rakesh Garg, FCA
Precautions

Be careful in local vs. ISS Transactions;

Analyze the transaction before applying the provision;

To repeat, be careful in drafting of contracts and
maintenance of records as per the contract;

When making any planning, consider all the Five
legislatures together, i.e., VAT/CST, Service Tax, Excise
Duty, Income Tax and Stamp Duty – Sometimes cost of
Planning is more than the cumulative tax saving.
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THANK YOU
Rakesh Garg, FCA
S S A R & ASSOCIATES, N. DELHI
(Author of Concepts of CST, Delhi VAT & GST )
Ph: (011) 65960912-13, 9810216270
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