15 September 2011
Central Sales Tax Act 1956 envisages single point of taxation i.e tax at the first point of sales. Subsequent sales during the movement of the goods from one state to another have been exempted under section 6(2) of CST Act. 1. First sale should be an inter state sales: The first sales must be an interstate sales. It can be either a section 3(a) or section 3(b) sale. A sales is considered as an interstate sales as per section 3 of CST Act if (a) It occasions the movement of goods from one state to another or (b) It is effected by transfer of documents of title to the goods during the movement of goods from one state to another.
2. Transfer of documents of title: Subsequent sales must be a section 3(b) sale i.e it should be a sales by transfer of documents of title to goods during the movement of such goods from one state to another,movement of goods from one state to another commences when goods are handed over to carrier and movement is deemed to continue till delivery is taken at the other end.
3. Subsequent sales must be to a registered dealer: The subsequent sales is exempt only if it is made to registered dealer
4. The goods should be of description referred to in section 8(3) of CST Act: Another requirement for claiming exemption for subsequent sales u/s 6(2) of CST Act is that the sale should be of goods which are specified in the certificate of registration of purchasing dealer.
5. Certificates required: Dealer selling the goods has to issue a certificate in prescribed form to the purchasing dealer(Prescribed forms are E1 form if its first sale and E2 form if subsequent sales). Subsequent purchaser has to issue certificate in prescribed form(This is C form) to his seller. Such certificates are to be produced before assessing authorities within prescribed time. The certificates in C,E1 and E2 forms are to be issued on quarterly basis.
CAclubindia
