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

CA Vibhash Kumar Sah

CA Vibhash Kumar Sah (Expert)
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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

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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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?

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