Consequences - Non deposition of CST - Penalty

[RAJESH MISHRA]

Dear Sir, My query is that, if any dealer initially purchases goods against 2% with form C and subsequently after 2-3 months, deny issuing form C and agreeing to pay differential CST to the seller through separate debit note for CST. Can seller is required to deposit such CST amount immediately if the same is paid to him by the purchaser or seller can utilized it for his business working capital till the CST order is passed by the assessing authority for that particular assessment year. What would be the consequences, if seller does not deposit such CST amount & shows it as CST liability in his records? Can he may be panelized under CST Act or not. Kindly give your opinion with relevant rules & provision of CST Act also refer some judgments made earlier on this matter/issue for better understandings.

[Rama Krishana]

I thing, no one would suggest you to collect the amount from the customer in the name of tax and utilize the same for your business activity and deposit the same later on. Though technically, at the time of assessment usually in case of failure to produce C form, the differential amount is paid, but there may be some liability of interest also. Be careful.

[RAJESH MISHRA]

Dear Sirs, As earlir, I had requested in my query (Issue ID 1689 dt.09.01.2010), for reference judgements with relevent provision of CST Act. I would like to reequest again, pls forward/ refer some judgments made earlier on this matter/issue for my better understandings if possible.

AI Summary

CST liability: sellers should deposit tax collected immediately rather than use for working capital; assessment may attract interest. Where a purchaser later withholds Form C and pays the differential to the seller, the seller is advised not to retain such tax for business use. Assessment practice ordinarily requires payment of the differential when Form C is not produced, and such payment may attract interest; failure to discharge assessed tax can expose the seller to penal consequences under the Central Sales Tax framework.