NON-ISSUANCE OF 'C' FORM BY THE REGISTERED DEALER

[KASTURI SETHI]

Dear Experts,

During the year 2013-14 and 2014-15, the registered dealer (purchaser) did not issue 'C' Form to the seller on account inter-state sale. Resultantly, Excise & Taxation Department confirmed the demand against the seller and attached the bank account of the seller for recovery of demand along with interest. Till date, the buyer has not issued 'C' Form.

Is there no provision in CST Act for taking action against the purchaser for non-issuance of 'C '-Form ? Is the purchaser not statutorily bound to issue C Form within stipulated period ?

Experts are requested to throw light on the above issues.

Thanks a lot.

[Padmanathan KV]

To my limited understanding of erstwhile law, there is no provision for Department to take action against the purchaser for non-issuance of C-form.

If the purchaser has represented to the seller for production of C-form for lower tax rate and he fails to do so, the seller can initiate civil proceedings against the purchaser.

[KASTURI SETHI]

Sh.Padmanathan Kollengode Ji,

Thank you very much for your prompt reply.

Will you please reply to my query regarding Income Tax matter posted yesterday ?

[Padmanathan KV]

Replied Sir

[GUNASEKARAN K]

Yes i agree with Mr. Padmanathan Kollengode comment on this matter.

Since the seller liable to submit C form for his interstate sales with concession rate of CST. Hence department will not trace the buyer to collect the C forms for his purchases. It is completely the seller's responsibility to collect & submit to the Sales Tax Dept.

For immediate remedy, the seller can remit the demand raised by Dept. and go for legal proceedings against the buyer to recover the demand paid or if buyer ready to issue C form then you can submit the forms to department and claim the differential amount paid by you.

[KASTURI SETHI]

Sh.Gunasekaran K Ji,

Thank you very much for your advice.

[Sadanand Bulbule]

Dear Sir ji

While concurring with the opinion of experts, in terms of Section 8[1] of the CST Act,1956, the rate of tax on inter-state sale of goods is @ 2% with effect from 01/06/2008. However it is subject to the production of declaration in FORM -C to be obtained from the registered dealer to whom the goods are sold as mandated under Section 8[4] of the CST Act. Failure to produce FORM-C would entail regular rate of sales tax applicable to the sale or purchase of such goods inside the State of seller. So there is no other option but to pay higher rate of tax with interest. There is no provision under the CST Act to fix the buyer for not furnishing FROM-C to the vendor.

Sir you are aware that, the CST Act,1956 is still in force, but limited to certain goods like the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. These goods are not yet notified under Section 9[1] of the GST Act, 2017, due to the monopoly of the States over these goods.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, I am deeply indebted to you for shedding light on the issue.

[Ganeshan Kalyani]

Sir, there was a periodicity of three months prescribed in CST Act to issue Form C by the buyer to the supplier.

[Karthik Purusothaman]

Dear All,

we are from tamilnadu, we sold spices to a inter-state customer for 2% with C form, the customer not produced C form, now we have to close the assessment. most of the spices sold are exempted in TN VAT. what will be the tax amount payable in this case?

AI Summary

Non-issuance of C form: seller bears tax liability and may pursue civil recovery; no statutory buyer penalty. Absence of C Form from a purchaser makes the seller liable to assessment at the regular intra state tax rate with interest; the CST Act contains no provision to directly penalise or fix tax liability on the purchaser for non issuance. The seller must obtain and produce the C Form and, if not provided, may either pay the departmental demand and pursue civil recovery from the purchaser or, if a belated form is supplied, seek adjustment or refund from the tax authority. A quarterly periodicity for issuance of the form has been noted, and CST continues to govern certain specified products not covered by GST.