02 July 2010
our company registered in sales tax faridabad. we have a customer in Nagpur who wants to purchase from us. One of our supplier in Mumbai. we want to deliver the material directly from Mumbai to Nagpur. But we are not registered in Nagpur. Can it be treat as E1 Sales without register in Sales Tax Nagpur. Pls. Clearify me asap.
E-1 SALES:- . IN THIS 3 STATES/ PARTIES ARE INVOLVED DURING THE TRANSPORTATION OF GOODS. AND AS PER THE STATE TAX LAWS, UPON ENTERING EACH STATE, A CENTRAL TAX OF 2% FOR EACH IS STATE IS PAYABLE. HOWEVER IF THE GOODS ARE REDIRECTED OR ENDORSED TO A DIFFERENT PARTY THEN TO AVOID MULTIPLE TAXATION, THIS SALE IN TRANSIT IS APPLIED. (AN EXAMPLE TO EXPLAIN THIS)
A TRADER MR GUPTA AT PUNJAB WANT TO BUY SOME MACHINERY, HE CONTACTED THAT MACHINERY EXPERT MAHESH OF DELHI, NOW MAHESH FIND THAT MACHINE IN DELHI, BUT HE HAS A FREIND MR SATPAAL OF KOLKATA WHO MANUFACTURES THAT MACHINE.
SO IN THIS CASE MAHESH OF DELHI WILL ASK MR SATPAAL OF KOLKATA TO SELL IT TO HIM, BUT DELIVER IT TO MR GUPTA AT PUNJAB. AND MAHESH WILL RECEIVE AN INVOICE FROM MR SATPAAL (WITH HIS NAME AS BUYER AND MR GUPTA'S NAME AS CONSIGNEE). THE GOODS WILL GO DIRECTLY TO MR GUPTA AT PUNJAB, HOWEVER HE WILL BE BILLED BY MR MAHESH (WITH MAHESH PROFIT OF COURSE). BUT MAHESH WILL NOT ADD ANY SALES TAX ON HIS BILL TO MR GUPTA. AND THIS IS THE INTERESTING PART, THAT SINCE GOODS HAVE BEEN TAXED AT 2% AT SOURCE FROM MR SATPAAL OF KOLKATA THEY WILL NOT BE FURTHER CHARGED ANY TAX. THIS WILL SAVE TAX TO MR GUPTA OF PUNJAB FROM BEING TAXED AT DELHI
NOW COMES THE FORMS PART. IN THIS EXAMPLE MR GUPTA OF PUNJAB WILL ISSUE A C FORM TO MR MAHESH OF DELHI, AND MR MAHESH TO MR SATPAAL, AND MR SATPAAL WILL ISSUE AN E-1 FORM TO MR MAHESH OF DELHI, THUS COMPLETING THE CHAIN. AND IF THIS CHAIN IS BROKEN AT ANY POINT THE PARTY LIABLE SHALL HAVE TO PAY PRESCRIBED (%) AS CENTRAL SALES TAX.
NOW SAME IS THE CASE WITH E-2 FORM, HOWEVER THERE ARE MORE THAN 3 STATES / PARTIES INVOLVED IN THIS TRANSACTION. AND THE SECOND STAGE SELLER (MR MAHESH IN ABOVE EXAMPLE) HAS TO ISSUE AN E-2 FORM TO THE SUBSEQUENT PURCHASER (MR GUPTA IN ABOVE EXAMPLE)
03 July 2010
When the supplier is in the same state, there is no movment of goods from one state to another. CST is not applicable as this in not an interstate trade/sale. so question of issuing E-1 form doesnot arise.
the mumbai supplier will charge you VAT @ applicable in state.
If you want to pass this vat credit to nagpur purchaser, you must first register in maharasthra and then issue a tax invoice.