E1/E2 transaction

[Asked by Guest]

Suppose manufacturer A sells to trader B (under E1 transaction) with C as ultimate consignee.

A raises invoice as follows:

Basic price = INR 100

ED = INR 12

CST = INR 2

Total = INR 114

B sells it to C under E1 transaction and raises invoice as follows:

Basic price = INR 150

ED (reimbursement) = INR 12

CST = ??

Can you pl help in finding out CST to be charged under question mark (??) above

[Ganeshan Kalyani]

Under sale in transit subsequent sale is exempt against form E1.

[Narendra Soni]

Central Sales Tax Act 1956 envisages single point of taxation i.e tax at the first point of sales. Subsequent sales during the movement of the goods from one state to another have been exempted under section 6(2) of CST Act. 'B' will not charge CST.

[YAGAY and SUN]

Subsequent sales under Rule 6(2) are exempted from the levy of CST.

[Kuldeep Nain]

Dear Sir / Madam

On What AMOUNT C (Consignee) will Issue C form to B (First Buyer). Confusion on amount.

1. ₹ 114

2. ₹ 150

AI Summary

Sale in transit exemption: subsequent interstate resale during movement is exempt from central sales tax when covered by transit form.
Under the sale in transit principle, a resale effected during interstate movement is exempt from central sales tax when covered by the prescribed inter state transit documentation; the subsequent seller (first buyer B) will not charge CST, preserving single point taxation at the first sale. The discussion records an unresolved practical question whether the consignee should issue the purchaser's declaration form on the original manufacturer's invoice value or the intermediary's onward invoice value.