Tax on inv

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joy jacob (Querist)
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22 July 2010 Hello sir

I have a query , I have

A - purcaser

B - Seller

C - Final Consumer

B is selling goods to A, and A is selling to C , B & C are in same state, what tax would be applicable

how the invoice would be created betwwen all these.

I understand this is not E1 sale , as first seller and final consumtion is in same state

Pls reply asap, as metter is urgent

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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22 August 2010 yes. your case is E-1 sales only

joy jacob

joy jacob (Querist)
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23 August 2010 Sir thanks for reply, could you please help me to understand as B & C are in same state, meaning :-
1.physically material not moving out of state.
still this would be a E1 sale
2.What tax applied on invoices when invoiced by all to each other and final seller to end user

Regards
joy jacob

Aashok Kumar Sharma online

Aashok Kumar Sharma

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26 July 2025 Hey Joy,

Here’s a clear explanation of your scenario:

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### Setup:

* **B (Seller)** and **C (Final Consumer)** are in the **same state**.
* **A (Purchaser)** is in **another state**.
* Goods flow: B → A → C
* Goods physically move **from B’s state to A’s state**, then from A’s state to C’s state (or C is in B’s state?). You mentioned B & C are in the same state, so goods must move out of that state to reach A and then come back?

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### E-1 Sale and Tax Implications:

* **E-1 Sale** (Under CST Act): Sale where goods are sold by a dealer in one state to a dealer in another state **and** the goods are delivered from the first state to the second state.

* In your case:

* If **goods physically move from B’s state to A’s state**, B → A is an **inter-state sale**.
* **B should issue a CST invoice** to A, charging **CST @ 2%** (if B has CST registration and A provides Form C).

* Next, A sells goods to C:

* Since **A and C are in the same state (A’s state)**, it is an **intra-state sale**.
* A will charge **VAT (or GST, if applicable)** to C as per that state’s rate.

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### Invoice & Tax Summary:

| Transaction | From | To | Tax Type | Tax Rate | Invoice Type |
| ----------- | ----------- | ----------- | ---------------- | ---------------- | --------------- |
| Sale 1 | B (State 1) | A (State 2) | CST (Interstate) | 2% (with Form C) | CST Invoice |
| Sale 2 | A (State 2) | C (State 2) | VAT or GST | State rate | VAT/GST Invoice |

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### Points to Note:

* **B to A sale is interstate** because goods move from one state to another.
* **A to C sale is intra-state** because both are in the same state.
* **Physical movement of goods** defines whether it is interstate or intra-state for tax purposes.
* Form C (or its GST equivalent) must be provided by A to B to get concessional CST @ 2%.
* If no Form C, B has to charge CST at normal rate (which is equal to VAT rate, but no input credit allowed).

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### So:

1. Yes, it is an **E-1 sale** because goods are moving from B’s state to A’s state.
2. Tax applied:

* B invoices A with CST at 2% (if Form C provided).
* A invoices C with VAT/GST at applicable rate.
3. Invoice must clearly mention CST on B→A invoice and VAT/GST on A→C invoice.

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If you want, I can help draft sample invoice formats or further clarify any step. Let me know!

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