What is E1 And E2 Transaction in case of CST

[Mayank Raj Srivastava]

What is E1 And E2 Transaction in case of CST exemption.

[Vinay Sharma]

In Case of E1 Sales is it necessary for purchaseing dealer to issue invoice in the name of consignee.

Suppose A in Maharashtra issues invoice in the name of B in Karnataka and consignee name is C in Karnataka. Name of the consignee is printed on the invoice itself.It is mentioned on the bill that payment should be made to B.

Please let us know if B should necessarily issue an invoice or any other document to C . 

Will this sale be regarded as E1 Sale as buyer and consignee both are in Karnataka.

 

 

 

[GURUSWAMY KRISHNAMURTHY]

Sir,

It may be worthwhile to mention that the Supreme Court earlier held that that even  if the identity of the buyer is known earleir than the commecement of movement of goods with the ultimate buyer idenitified to the seller in Dharangadara Trading Company (1988 (5) TMI 352 - SUPREME COURT OF INDIA) = 70 STC 92 case which can be distinguished with A & G Product Technology case

This 70 STC 92 was followed in  Tractors and Farm Equipment Ltd Vs State of Tamil Nadu by the Madras High Court  (2002 (6) TMI 43 - MADRAS High Court) = 112 STC 300 and held as falliing as an interstate sale.

In fine knowledge of the ultimate buyer to the first seller made by the middle men or agent need not be an impediment for seeking exemption from section 3(b)

[Vinay Sharma]

Mr. Pradeep Khatri,

I shall be grateful if you could address my question.

Regards.

 

[YAGAY andSUN]

An commercial invoice will be issued by 'B' with endorsement on LR.

[GURUSWAMY KRISHNAMURTHY]

The indication of the payment to B in the invoice is not prohibited and similarly the indiction of the buyer in the invoice giving the ultimate buyer as C is also not a constraint at all . In fact this was the exact issue covered in 70 STC which I have mentioned in my view.

As for as the endorcement is concerned, it may not be possible to do it if it is a case of door delivery by the seller and the intention of the parties need to be seen.

The type of transaction narrated by you is a 3(b) sale only i.e. E1 sale as long as you do not inerfear in the movement of goods till it is delivered to the ultimate buyer

 

AI Summary

Clarification on CST Exemption: Buyer's Identity and Payment Details Do Not Affect E1 Sale Classification Under CST. The forum discusses E1 and E2 transactions under the Central Sales Tax (CST) exemption. A participant queries whether a purchasing dealer must issue an invoice to the consignee when the invoice is issued by a seller in Maharashtra to a buyer in Karnataka, with the consignee also in Karnataka. Responses clarify that the Supreme Court and Madras High Court have ruled that knowing the ultimate buyer's identity before goods movement does not impede CST exemption. It is noted that the buyer's identity on the invoice and payment details do not affect the transaction's classification as an E1 sale.