CST, Entry Tax & VAT

[Muralidharan J]

Dear All,

I have purchased a Tourist vehicle from Madyapradesh with C Form Billing of 2% CST and i paid 12.5 % Entry Tax for TN Govt. Now as i want to resell that vehicle, can i collect the CST 2% and As well as 14.5% VAT from Customer. Pl Clairfy me. Since already i paid 2% as CST in C form Billing, and again 12.5% as ET to TN Govt. But my friends are saying that after sales of vehicle i have to pay 14.5% TN vat. (Balance of 2%, from 12.5% Entry Tax) is it so?

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[Ganeshan Kalyani]

The taxes paid on purchases does not form a criteria for levying taxes on sales. you have purchased interstate by paying CST@2% against form C. But while selling locally you have to apply the local taxes applicable to that product as per the state VAT schedule. There is no other formula that to check the respective schedule entry of VAT Act.

[YAGAY and SUN]

Can a tourist vehicle be purchased against Form C under CST Act, 1956 read with the CST (Registration and Turnover) Rule, 1957?

[Ganeshan Kalyani]

Logically not. The querist is requested to substantive how he succeeded in issuing Form C. Awaiting his revert to comment further. Thanks.

AI Summary

Local VAT applies on resale; purchase CST or entry tax payments do not determine sales tax liability.
Taxes paid on acquisition do not determine the taxability of subsequent sales; sales within the state are subject to the local VAT schedule and must be charged accordingly. Entry tax paid to the state does not automatically offset VAT on a later local sale. The validity of acquiring the vehicle against a Form C may be questionable and should be examined, but it does not alter that local VAT liability on resale is governed by state VAT law.