purchase from same state and material delivered to another state

[premchand talreja]

we are based in Mumbai, we intend to purchase some machinery from maharastra based manufacturer and supply it to customer based in Rajasthan. The material will be directly transported by manufacturer to our end customer. what are the requirements and how should we treat this transaction.

[Ganeshan Kalyani]

Sir, the provison of in transit sale is applicable in your case. Form C/E1 is applicable. Thanks.

[YAGAY andSUN]

In our view, this is not a transit sale under CST Act, 1956. Please check proviso to Section 3 (a) and 3(b) read with Section 6 (2) of the CST Act. There are plethora of judgment which says the first sale should be interstate sale. In this transaction Goods are being procured from Maharashtra based supplier and supplied to Rajasthan based customer but the middle man is in Mumbai which is in Maharashtra.

[Ganeshan Kalyani]

Sir, I have replied based on practical experience. Also I will have read an article on the subject. I shall find out the same and reproduce here. We shall discuss on the same.

Sir, I also agree with you because if there are favouring judgments there are against as well. Thanks.

AI Summary

In-transit sale: direct delivery to an out-of-state buyer can qualify for Form C/E1 if the first sale is interstate. Where goods are purchased from a seller in one State and delivered directly by the seller to a buyer in another State, the transaction may qualify as an in-transit sale and attract inter-State treatment if the movement of goods occurs under the contract of sale and appropriate transit documentation (Form C/E1) is obtained; however, entitlement can be contested where the first sale is argued not to be interstate or where an intermediary in the seller's State affects the character of the sale.