Invoice queries

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2014 Dear Experts

1) X of delhi sells goods to Y of Punjab. Both are registered in their states.

(a) Now will X issue Y a retail invoice or tax invoice?

(b) X will Charge Y CST@2% against Form C.
Can Y claim credit of this CST paid by him on interstate purchase?

(c) How does seller, X in this case knows whether Y is registered in Punjab or not?
It is important for X to ascertain whether Y is registered in Punjab or not because only if Y registered X can charge CST at 2% else X has to charge VAT rate applicable in Delhi.
How does X know about the registration status of Y in Punjab?

(d) What is the time frame within which Y has to give Form C to X?

(e) what are the consequences both for X and Y, if Y doesn't give Form C to X?

Regards
Shivani

Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2014 hello anybody there

any expert to solve my queries please !

thanks

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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01 August 2024 Let's address each of your queries step-by-step:

### 1. Invoice Type

**(a) Now will X issue Y a retail invoice or tax invoice?**

**Answer:** X will issue a tax invoice to Y. In an inter-state transaction between two registered dealers, a tax invoice is necessary to comply with the GST laws. Retail invoices are typically used for sales to end consumers (B2C transactions), whereas tax invoices are used for business-to-business (B2B) transactions.

### 2. CST Credit

**(b) X will Charge Y CST @2% against Form C. Can Y claim credit of this CST paid by him on interstate purchase?**

**Answer:** Under the pre-GST regime, CST (Central Sales Tax) paid on interstate purchases was not eligible for input tax credit. CST was a cost to the buyer. Under the current GST regime, such interstate transactions are subject to IGST (Integrated Goods and Services Tax), and input tax credit can be availed on IGST.

### 3. Verification of Registration

**(c) How does seller, X in this case know whether Y is registered in Punjab or not?**

**Answer:** X can verify Y's registration status by requesting Y's GSTIN (Goods and Services Tax Identification Number). The GSTIN can be validated on the GST portal to confirm Y's registration status. Additionally, Y can provide a copy of their GST registration certificate as proof.

### 4. Time Frame for Form C

**(d) What is the time frame within which Y has to give Form C to X?**

**Answer:** Form C should ideally be issued quarterly for transactions under the CST Act. The buyer (Y) must provide Form C to the seller (X) within the prescribed time limit, which is generally within three months from the end of the quarter in which the sale was made.

### 5. Consequences of Not Providing Form C

**(e) What are the consequences both for X and Y if Y doesn't give Form C to X?**

**Answer:**

- **For X (Seller):**
- If X does not receive Form C from Y, X cannot charge CST at the concessional rate of 2%.
- Instead, X would need to charge the VAT rate applicable in Delhi, which could be higher.
- X may be liable to pay the differential tax along with interest and penalties if they fail to collect the correct amount of tax initially.

- **For Y (Buyer):**
- Y will lose the benefit of the concessional rate of CST.
- Y might also face difficulties with their internal cost accounting and profitability projections.
- Y may have to reimburse X for the higher tax rate applicable, which could increase their purchase cost.

### Conclusion

In summary, ensuring proper documentation and compliance with GST regulations is crucial for smooth interstate transactions. Sellers should verify the buyer's registration status and ensure timely receipt of necessary forms to avail tax benefits and avoid legal complications.

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