VAT OR CST

[Asish Kumar Nath]

Dear Expert,

 

We are the proprietor ship company in Kolkata , West Bengal generally engage in Trading Business in all over India.

 

Recently we got an order from a reputed company in Kolkata. Right now they have a project in Andhra Pradesh.They asked us to deliver the material in Andhra Pradesh but the invoice should be in kolkata only.

 

Now my question is what type of sales tax should we charged Vat/Cst? As per my best knowledge whether we raised the invoice in kolkata, the invoice will raise in VAT though we deliver the material at Andhra Pradesh.

 

Please help me out with reference of cst act/rules.

 

Asish Kumar Nath

[YAGAY and SUN]

Buyer and seller can be in same State U/S 3 (a) under CST Act,1956:- Sale can be inter state even if both buyer and seller are in same State if goods are moving out of State on account of sale. You would have to charge CST as applicable.

[Asish Kumar Nath]

Sir,

Thank you for your reply.

I want to vantilate a little on your openion: 

As CST Act:

A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a) occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during theirmovement from one State to another.

Explanation 1 - Where goods are delivered to a carrier or other bailee for

transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when

delivery is taken from such carrier or bailee.

Explanation 2 - Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State.

Please read the marked and highlighted area where it is clearly written clause (a) can not fulfill without satiesfy clause (b)  i.e transfer of  document of tile from onestate to anotherstate.

Now in my case transfer of document of title in same state but the material only deliver to another state on behalf of customer.

Sir, I am really confused , please help me. If I am wrongly interpreted the matter please forgive me.

[YAGAY and SUN]

The Section 3(a) andSection 3(b) is separated by ; or .

Section 3(a) describes the  Bill to Ship to aspect of sale under CST Act whereas Section 3b describes the concept of Transit sale.

For the purpose of completion of transit sales under Section 3(b), fulfilment of condition 3a is must.

Dear Sri Asish Kumar Nath

The transaction referred by you, falls under Sec 6(2) which deals E - 1 form transaction.  A seller can raise the invoice on  buyer (your kolkata  buyer) within the same State, but move the goods to another buyer(Andhra Pradesh buyer)  in another State.  The fist buyer endorses the LR in favour of the second buyer who will clear the goods.  The first buyer will raise a bill on the second buyer (Consignee) but, need not collect any tax on the bill.  But they have to mention that it is a sale under Sec 6(2) b) of the CST Act.

You have to raise invoice on the kolkata dealer with CST 2% against C Form only and not VAT.

 Sec 3  of CST Act, 1956, defines interstate movement of goods as 

A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a)occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.

Thanks and Regards,

 

USHA

[Asish Kumar Nath]

Dear Usha Ji,

Thanks for your  reply. Now please inform me that is it  necessary to go through E1 sale?

 

Regards,

Asish Kumar Nath

Dear Sri Asish Kumar Nath

For the nature of transaction referred by you, the sale will be only a E-1 sale as you have said that the invoice has to be in the name of the local buyer and the consignment will be despatched to Andhra Pradesh.  

Thanks and Regards,

USHA

[r.rajkumar kumar]

sales tax is only on the sale of goods and movement of goods. and the contract entered. since the contract is entred between Kolcota and A.P. and goods instated of comming to kokota it delivered to AP as per sthe contact terms. hence only CST applicable. and not local tax .

 

[Rangarajan DV]

Dear Mr Asish

When the movement of goods is from one State to another State, and if the buying dealer is a registered dealer, CST @ 2% against Form C shall be charged. Otherwise it CST will be the local VAT rate, without C form. In the instant case, since the material commence from West Bengal to Andhra Pradesh, the ultimate delivery and sales concludes only in AP and hence please charge CST as applicable.

Hope you are clear. BEst Regards

[Sanjib Kothari]

Prima Facie, the sale must be under CST Sale as the movement of goods are from one state to another. But, you must seek confirmation from your buyer based in Kolkata about issuance of C Form to you for this transaction from West Bengal

AI Summary

Interstate sale: charge central sales tax when goods move across states; obtain C form to secure concessional treatment.
Where goods move from one State to another pursuant to a sale, the transaction is an inter State sale subject to Central Sales Tax rather than local VAT. If the invoice is raised in State but the consignment is dispatched and transport documents are endorsed to an out of State consignee, the transaction aligns with an E 1/consignment sale; the seller must charge CST and may claim concessional treatment only upon receipt of the prescribed C form from the purchasing dealer.