Sale in transist
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 April 2012
one of my client registered under mvat purchased good from registered dealers in goa & sold out to goa party directly,now what is the treatment of tax liabilities of this transaction
03 May 2012
Your Goa seller will charge CST to you. You need not tho charge any sales tax as u can show the transaction as transit sales subject to other conditions as laid down in CST Act.
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 May 2012
thanks but as per goa party there is no cst is applicable in state & charge me local tax now what to do
22 July 2025
Your query pertains to a **transit sale** under the **Central Sales Tax (CST) Act**, and it involves the following scenario:
* Your client (registered under MVAT – Maharashtra VAT) **purchased goods from a registered dealer in Goa**
* These goods were **directly sold to another party in Goa**
* The transaction is being questioned on CST/local VAT applicability
---
### 📌 Let's analyze:
### ✅ **1. Concept of Transit Sale (Section 6(2) of CST Act):**
A **transit sale** is when:
* There is a **first inter-state sale** (Goa seller → Maharashtra buyer)
* The goods are **not physically delivered** to Maharashtra but **moved directly** to a third party (Goa buyer) **on the instruction** of the Maharashtra buyer
* The Maharashtra buyer **sells during the movement of goods**
👉 In such cases, the **second sale** (Maharashtra buyer → Goa buyer) is **exempt from CST**, provided:
* The first sale was a CST sale
* The second sale is **effected by transfer of documents of title (e.g., lorry receipt)**
* Forms required:
* Maharashtra buyer collects **Form E1** from Goa seller
* Maharashtra buyer issues **Form C** to Goa seller
* Goa buyer issues **Form C** to Maharashtra buyer
---
### ❓ Your Issue:
You mentioned:
* The **Goa seller is not charging CST**, but instead **charging local Goa VAT**
* Goa buyer is also not accepting CST
---
### ⚠️ **Problem Identified:**
If the **Goa seller is charging local VAT**, that means:
* He is treating the sale as **intra-state**, not inter-state
* This violates the **chain required for a valid transit sale**
👉 In this case, your client **cannot claim a transit sale exemption**, because:
* There is **no CST paid on the first leg**
* No Form E1 will be available
* No valid documentation of inter-state movement initiated by the first seller
---
### ✅ **What Can Be Done?**
1. **Verify actual movement of goods**: Were goods really sent from Goa to Goa? If yes, it might **not be an inter-state sale** at all.
2. **If goods did move inter-state**, ask the Goa seller to:
* **Charge CST** instead of Goa VAT
* Provide **Form E1** to support your client’s transit sale claim
3. **If seller refuses**, your client may:
* Have to **treat the sale as a local sale in Goa** (not under MVAT)
* **Register in Goa** (if such sales are frequent)
* Or **restructure** transactions to ensure proper tax treatment in future
---
### 🔁 Suggested Action:
| Step | What to Do |
| ---- | ---------------------------------------------------------------------- |
| 1. | Confirm if goods actually moved inter-state |
| 2. | Request Goa seller to charge **CST**, not VAT |
| 3. | Collect **Form E1** and issue **Form C** if valid transit sale |
| 4. | If not possible, treat as local Goa sale and comply with local VAT law |
---
Would you like help drafting communication to the Goa seller or examples of Form C and Form E1 usage?
* Your client (registered under MVAT – Maharashtra VAT) **purchased goods from a registered dealer in Goa**
* These goods were **directly sold to another party in Goa**
* The transaction is being questioned on CST/local VAT applicability
---
### 📌 Let's analyze:
### ✅ **1. Concept of Transit Sale (Section 6(2) of CST Act):**
A **transit sale** is when:
* There is a **first inter-state sale** (Goa seller → Maharashtra buyer)
* The goods are **not physically delivered** to Maharashtra but **moved directly** to a third party (Goa buyer) **on the instruction** of the Maharashtra buyer
* The Maharashtra buyer **sells during the movement of goods**
👉 In such cases, the **second sale** (Maharashtra buyer → Goa buyer) is **exempt from CST**, provided:
* The first sale was a CST sale
* The second sale is **effected by transfer of documents of title (e.g., lorry receipt)**
* Forms required:
* Maharashtra buyer collects **Form E1** from Goa seller
* Maharashtra buyer issues **Form C** to Goa seller
* Goa buyer issues **Form C** to Maharashtra buyer
---
### ❓ Your Issue:
You mentioned:
* The **Goa seller is not charging CST**, but instead **charging local Goa VAT**
* Goa buyer is also not accepting CST
---
### ⚠️ **Problem Identified:**
If the **Goa seller is charging local VAT**, that means:
* He is treating the sale as **intra-state**, not inter-state
* This violates the **chain required for a valid transit sale**
👉 In this case, your client **cannot claim a transit sale exemption**, because:
* There is **no CST paid on the first leg**
* No Form E1 will be available
* No valid documentation of inter-state movement initiated by the first seller
---
### ✅ **What Can Be Done?**
1. **Verify actual movement of goods**: Were goods really sent from Goa to Goa? If yes, it might **not be an inter-state sale** at all.
2. **If goods did move inter-state**, ask the Goa seller to:
* **Charge CST** instead of Goa VAT
* Provide **Form E1** to support your client’s transit sale claim
3. **If seller refuses**, your client may:
* Have to **treat the sale as a local sale in Goa** (not under MVAT)
* **Register in Goa** (if such sales are frequent)
* Or **restructure** transactions to ensure proper tax treatment in future
---
### 🔁 Suggested Action:
| Step | What to Do |
| ---- | ---------------------------------------------------------------------- |
| 1. | Confirm if goods actually moved inter-state |
| 2. | Request Goa seller to charge **CST**, not VAT |
| 3. | Collect **Form E1** and issue **Form C** if valid transit sale |
| 4. | If not possible, treat as local Goa sale and comply with local VAT law |
---
Would you like help drafting communication to the Goa seller or examples of Form C and Form E1 usage?
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