Tax Implications VAT or CST
This query is : Resolved
22 November 2009
Dear Sirs/Madam,
Company "A" is an Pipe Manufacturer, and Company "B" is an Coating Contractor,and Company "C" is a Client based at Delhi. Both the Compnay "A" & "B" operating their business at Gujarat. Company "C" has given an order for pipe manufacturing to Company "A" and asked to deliver the pipes to Company "B" for Coating activities. (i.e further process) Now the Company "B" has to deliver the duly Coated Pipes to Punjab & Haryana as desired by the Company "C". In this circumstance, Pipe Manufacturer will charge CST or VAT in their Excise Invoice cum Delivery Challan?. Also Coating Contractor will charge CST or VAT in their Excise Invoice cum Dlivery Challan for the ultimate delivery spot (i.e. Punjab, Haryana -Outside Gujarat)
Kindly clarify the Sales Tax implications of both the Company "A" & "B" in their Excise Invoice cum Delivery Challans.
Regards,
S.VELMURUGAN
Company "A" is an Pipe Manufacturer, and Company "B" is an Coating Contractor,and Company "C" is a Client based at Delhi. Both the Compnay "A" & "B" operating their business at Gujarat. Company "C" has given an order for pipe manufacturing to Company "A" and asked to deliver the pipes to Company "B" for Coating activities. (i.e further process) Now the Company "B" has to deliver the duly Coated Pipes to Punjab & Haryana as desired by the Company "C". In this circumstance, Pipe Manufacturer will charge CST or VAT in their Excise Invoice cum Delivery Challan?. Also Coating Contractor will charge CST or VAT in their Excise Invoice cum Dlivery Challan for the ultimate delivery spot (i.e. Punjab, Haryana -Outside Gujarat)
Kindly clarify the Sales Tax implications of both the Company "A" & "B" in their Excise Invoice cum Delivery Challans.
Regards,
S.VELMURUGAN
22 November 2009
1
22 November 2009
0
26 July 2025
Hey! Here’s the VAT and CST implication in your described scenario involving Companies A, B, and C:
---
### Situation Recap:
* **Company A (Pipe Manufacturer in Gujarat)**: Manufacturing pipes as per order from **Company C (Client in Delhi)**.
* Pipes are delivered **to Company B (Coating Contractor in Gujarat)** for coating.
* After coating, Company B delivers coated pipes to **Punjab & Haryana** as per Company C’s instruction.
---
### Tax Implications:
#### 1. **Company A (Pipe Manufacturer)**
* Pipes are manufactured in Gujarat and dispatched **to Company B (within Gujarat)**.
* Since goods are moving **within the same state (Gujarat to Gujarat)**, **VAT** applies here (not CST).
* Company A **should charge VAT** on the sale of pipes to Company B.
* The invoice cum delivery challan from Company A to Company B should show VAT as applicable under Gujarat VAT law.
#### 2. **Company B (Coating Contractor)**
* After coating, pipes are sent from Gujarat to Punjab & Haryana (other states).
* This is an **inter-state sale** by Company B.
* For inter-state sales, **Central Sales Tax (CST)** is applicable.
* Company B should **charge CST** on the sale of coated pipes to Company C.
* Invoice cum delivery challan by Company B to Company C should mention CST as per the CST Act.
---
### Summary Table:
| Party | Nature of Sale | Tax Applicable | Tax to be Charged on Invoice cum Delivery Challan |
| ------------- | ------------------------------------------- | ----------------------- | ------------------------------------------------- |
| Company A → B | Intra-state sale (within Gujarat) | VAT | VAT |
| Company B → C | Inter-state sale (Gujarat → Punjab/Haryana) | CST (Central Sales Tax) | CST |
---
### Additional Points:
* **VAT Registration**: Both Company A and B should be registered under Gujarat VAT.
* **C Form / Form C**: Company B should collect Form C from Company C to avail concessional CST rates.
* **Excise**: Excise duty is separate and depends on central excise laws; your question is specifically about VAT/CST.
---
---
### Situation Recap:
* **Company A (Pipe Manufacturer in Gujarat)**: Manufacturing pipes as per order from **Company C (Client in Delhi)**.
* Pipes are delivered **to Company B (Coating Contractor in Gujarat)** for coating.
* After coating, Company B delivers coated pipes to **Punjab & Haryana** as per Company C’s instruction.
---
### Tax Implications:
#### 1. **Company A (Pipe Manufacturer)**
* Pipes are manufactured in Gujarat and dispatched **to Company B (within Gujarat)**.
* Since goods are moving **within the same state (Gujarat to Gujarat)**, **VAT** applies here (not CST).
* Company A **should charge VAT** on the sale of pipes to Company B.
* The invoice cum delivery challan from Company A to Company B should show VAT as applicable under Gujarat VAT law.
#### 2. **Company B (Coating Contractor)**
* After coating, pipes are sent from Gujarat to Punjab & Haryana (other states).
* This is an **inter-state sale** by Company B.
* For inter-state sales, **Central Sales Tax (CST)** is applicable.
* Company B should **charge CST** on the sale of coated pipes to Company C.
* Invoice cum delivery challan by Company B to Company C should mention CST as per the CST Act.
---
### Summary Table:
| Party | Nature of Sale | Tax Applicable | Tax to be Charged on Invoice cum Delivery Challan |
| ------------- | ------------------------------------------- | ----------------------- | ------------------------------------------------- |
| Company A → B | Intra-state sale (within Gujarat) | VAT | VAT |
| Company B → C | Inter-state sale (Gujarat → Punjab/Haryana) | CST (Central Sales Tax) | CST |
---
### Additional Points:
* **VAT Registration**: Both Company A and B should be registered under Gujarat VAT.
* **C Form / Form C**: Company B should collect Form C from Company C to avail concessional CST rates.
* **Excise**: Excise duty is separate and depends on central excise laws; your question is specifically about VAT/CST.
---
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