C Form and its implications

What is C Form? And what are its implications in current scenario?

Provision of C Forms is in Central Sales Tax Act,1956. As the name suggest it is to be controlled by Central Government as all revenue goes to Central Govt. But in reality it is controlled by individual states and creating a lot of problem.

What is C Forms and when it is to be issue?

When a registered dealer purchase goods from outside of his state, he gets rebate of specific percentage of sales tax on the ground that it will declare this purchase to his state department and issue the C Form against those invoice.

For Eg. If ABC Pvt. Ltd. based in Gurgaon ( Harayana) is registered with Sales Tax Department of Haryana make a purchase of Machine Tools from a Delhi Registered Dealer Jaibros Tools for the value of Rs.100,000.

Machine Tools are traded at 5% VAT in Delhi hence central sales tax would be 5% but by virtue of Central Sales Tax Act, 1956 ABC Pvt. Ltd. Get the rebate of 3% of Sales tax portion and pay only 2% along with promise to issue forms of 3% Value to Jaibros Tools.

So Jaibros Tools issued invoice of Rs.1,00,000 (Basic value) + Rs.2000 (CST) and required 3% of C From from ABC Pvt. Ltd.

In the same example above Jaibros Tools is also making purchase under CST Act ,1956 and promising to issue C Form.

Now Come to the point,

Both ABC Pvt. Ltd. And Jaibros Tools are required to furnish the details of Purchase under the act Central Sales Tax Act, 1956 in their quarterly return of Sales Tax and Sales Tax Department will provide the C from to dealer so that dealer can submit it to its creditors.

Now Jaibros Tools filed its return properly and asked for C forms from the Sales Tax Department to issue to its creditor but Jaibros Tools denied for C Forms on the ground that they have not submitted its C forms against the rebated sales tax sales they made to ABC Pvt. Ltd.

When they approach ABC Pvt. Ltd. They said they are facing same problem so they can not provide the C forms to Jaibros Tools, it conclude that everybody has to provide C Forms to each other but unable to get from sales tax department on the ground they have not submitted forms.

How govt. Can Resolve it?

Every dealer who is making declaration of sales under CST Act should be able to get the C Form no matter wheather it submitted its C Form and it would definitely enable him to get his C Form because every issuer will have a receiver.