AMENDMENTS TO THE CENTRAL SALES TAX ACT, 1956 BY
THE TAXATION LAWS (AMENDMENT) ACT, 2007
The Taxation Laws
(Amendment) Act, 2007 which has made several changes in the CST Act, 1956, came into force on
(1) No CST exemption in respect of subsequent sale to Government [SEC.6(2)]:
a. Section 6(2) exempts subsequent sale of goods (sold in the course of inter-state trade or commerce), to the Government or a registered dealer by transfer of documents of title to such goods during the same movement. Now, sub-section (2) has been substituted to deny this benefit to the Government. Therefore, subsequent sale to Government will no longer be exempt from CST.
b. New sub-section (2) provides that where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods to a registered dealer, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax.
c. However, no such subsequent sale shall be exempt from tax unless the dealer effecting the sale furnishes to the prescribed authority and within the prescribed time or within such further time as that authority may, for sufficient cause, permit-
Ø a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in the prescribed form; and
Ø if the subsequent sale is made to a registered dealer, a declaration referred to in subsection (4) of section 8:
d. However, it shall not be necessary to furnish the declaration referred to in clause (b) of (iv) above in respect of a subsequent sale of goods if,-
Ø the sale or purchase of such goods is, under the sales tax law of the appropriate State, exempt from tax generally or is subject to tax generally at a rate which is lower than 3% or such reduced rate as may be notified by the Central Government under section 8(1) (whether called a tax or fee or by any other name); and
Ø the dealer effecting such subsequent sale proves to the satisfaction of the prescribed authority that such sale is of the nature referred to in this sub-section.
NOTE - RELATED AMENDMENTS: Since subsequent sale to Government is no longer exempt, the condition requiring furnishing of certificate referred to in section 8(4)(b) by the dealer effecting the sale has been removed. Therefore, section 10, imposing penalty for furnishing a false certificate or declaration, has also been accordingly amended to remove the reference to such "certificate".
(2) Concessional rate of tax not applicable on inter-State sale to Government [Sec.8(1)]:
a. The applicable rate of CST in respect of sale of goods to the Government or registered dealer [in respect of goods specified in section 8(3)] is 3% or the State sales tax rate, whichever is lower.
b. Henceforth, such Concessional rate would
not be available in respect of inter-State sale to Government.
c. There fore, to give effect to the reduction in CST rate and denial of Concessional rate in respect of sale to Government, section 8(1) has been substituted. New sub-section (1) provides that every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay CST at 3% or the State sales tax rate, whichever is lower.
d. Consequential amendment has been made in Sec.8(4). Since sale to the Government would no longer attract concessional rate of tax, the requirement of furnishing a certificate in the prescribed form duly filled and signed by a duly authorized officer of the Government has been removed.
e. Further, the declaration should be furnished within the prescribed time or within such extended time as the prescribed authority may, for sufficient cause, permit.
a. Amendments have been made in Sec.8(5) which empowers the State Government to grant exemption from CST or to reduce the rate of CST by notification in the Official Gazette in the public interest. Hereafter, the State Government cannot grant such exemption or concession in rate of tax in respect of sale to Government.
b. Consequential amendments have also been made in -
Ø Section 7 dealing with registration of dealers;
Ø Section 9 dealing with levy and collection of tax and penalties; and
Ø Section 10A dealing with imposition of penalty in lieu of prosecution.
In these sections, reference to clause (a) of sub-section (4) of section 8 has been substituted with sub-section (4) of section 8, since there are no clauses in new sub-section (4).
(3) The State sales-tax rate to be the rate of CST applicable in respect of sale of goods not falling under section 8(1) [New sub-section (2) of section 8]
a. Presently, in respect of sale of goods, not falling under section 8(1), the applicable rates of CST are:
Ø in respect of declared goods, twice the State sales-tax rate;
Ø in respect of undeclared goods, 10% or the State sales-tax rate, whichever is higher.
b. The applicable rate of CST on sale of goods not covered under section 8(1) would now be the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State.
c. For this purpose, a dealer shall be deemed to be a dealer liable to pay tax under the sales-tax law of the appropriate State, even if he may not be so liable under that law.
(4) New rates of Central Sales Tax: Consequent to the amendments made in Sec.8, the new rates of CST effective from 1.4.2007 would be:
Description of goods Applicable rate of CST
Goods specified in Sec.8(3) sold to Registered 3% or the State sales tax rate, dealer. whichever is lower.
(Form C to be furnished by the dealer)
any class of such dealers as may be specified in
the notification provided the following conditions The applicable rate would be mentioned
are fulfilled: in the Notification.
1. The sale is to a registered dealer & 2. Form C has been furnished.
(5) Tobacco products excluded from the list of declared goods [Section 14].