Tax on inv
This query is : Resolved
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
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
22 August 2010
yes. your case is E-1 sales only
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
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
26 July 2025
Hey Joy,
Here’s a clear explanation of your scenario:
---
### 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?
---
### 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.
---
### 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 |
---
### 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).
---
### 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.
---
If you want, I can help draft sample invoice formats or further clarify any step. Let me know!
Here’s a clear explanation of your scenario:
---
### 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?
---
### 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.
---
### 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 |
---
### 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).
---
### 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.
---
If you want, I can help draft sample invoice formats or further clarify any step. Let me know!
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