Regarding DS2 & Purchase against C-Form

[PARVEEN ARORA]

Delhi dealer purchases the material from Punjab dealer against C-Form & give instruction to the Punjab dealer to directly dispatch the material to the consumer in other states except Delhi. Physical material not entered in Delhi.

Is Delhi dealer liable to file DS2?

Is the purchase against C-form is allowable or not in D-Vat Act?

[Ganeshan Kalyani]

Sir,

1) Delhi dealer is not required to file DS2.

2) yes purchase against Form C is allowed inin Delhi.

The transaction is a Sale-in-Transit. Thanks

[YAGAY andSUN]

As we understood this transaction comes under purview of Section 3 (a) of CST Act, 1956. In simple words it is a kind of Bill to Ship to Transaction which are allowed in Interstate Sales. Relevant CST Forms are C and E-1. However, DS2 shall not be applicable in this transaction since goods are not physically being entered in Dehli

[CSSANJAY MALHOTRA]

Wherever Invoice issued from manufacturer's place has mention of Bill to Party as Delhi party address and Ship to as Customers address outside Delhi, the same is planned sale at factory gate and does not fall into "Sale in Transit". Various appellate judgments have upheld this view.

Sale in Transit means that the goods are sold on the way to final destination and the buyer of goods are not aware of his Customer. In that case, LR is endorsed by Delhi Buyer in favour of his buyers.

[Ganeshan Kalyani]

Sir, I have come across case law wherein it was mentioned that even if the subsequent buyer was know before the first transaction takes place it is within the provision of In-transit sale. The condition which was emphasized was that the material purchased is routed to subsequent buyer without taking the delivery of the such goods.

Sir, Sri Sanjay Sir, I would agree with your views in a way that if there are case laws supporting the contention that it is a sale in Transit then there are equal number of case laws standing against such views. Thanks.

[CSSANJAY MALHOTRA]

Dear Sh. Ganeshan ji,

Agreed with you and depends upon assessing officer to take call on case to case basis. Thanks for sharing sir, really appreciate as makes the discussion healthy.

[Ganeshan Kalyani]

Sri Sanjay Sir, thanks for your inputs and discussion. Healthy discussion really. Thanks.

AI Summary

Sale-in-transit affects filing obligations and C-Form permissibility; goods not entering the state generally remove filing obligation. Transactions where an out-of-state seller dispatches goods directly to an out-of-state end-customer but invoices a Delhi buyer as bill-to are characterised either as sale-in-transit-permitting purchases against Form C and excusing the Delhi dealer from filing the state purchase return because goods do not enter the state-or as planned factory-gate sales, which appellate decisions have sometimes treated as not falling within sale-in-transit; resolution depends on delivery facts, LR endorsement, case law and assessing officer discretion.