Liability of local tax

[A RAVINDRA]

X is a selling agent in Karnataka for Y who is a manufacturer in Karnataka. X procures an order from Z in Tamilnadu and informs Y to raise the invoice in the name of X and mention consignee as Z for the order so procured. Y prepares an invoice on X and consignee as Z and send the material directly to Z in tamilnadu attaching one more invoice raised by X on Z with 2% CST against form C. Y has not charged sales tax in his invoice to X (consignee as Z) The said transaction is done taking the benefit of section 8 & 6 of CST Act. I would like to know whether the said transaction is in order and as per section 8 of CST Act. Will there be any liability of local tax to Y in the said transaction. Please clarify

AI Summary

Debate Over Tax Implications: Is It an Interstate Sale Exempt from VAT or a Local Sale Liable for VAT? A discussion on a legal forum addresses the tax implications of a transaction involving three parties: X, a selling agent in Karnataka; Y, a manufacturer in Karnataka; and Z, a buyer in Tamil Nadu. X procures an order from Z and instructs Y to invoice X, with Z as the consignee. Y sends the goods directly to Z with an invoice from X to Z, applying a 2% CST against form C, while not charging sales tax to X. One respondent argues it is an interstate sale exempt from local VAT, while another contends it is a local sale liable for VAT, referencing a legal case for support.