cst and input tax credit can only be adjusted if both are paid/payable to treasury of same government.
(1) if purchased from other state and sold to same state- Cant be adjusted as because CSt is paid to that otehr state and vat is payable to domestic state
(2) Purchase made from own state and sold outside- since input vat and cst is paid to same govt. ie. own government. CST can be adjusted with input VAT paid.
(3) If purchased and sold in own state- VAt payable can be adjusted withh input vat
(4) if purchased from other state and sold to oter state (whether sold to purchasing state or not)- CSt payable cant be adjusted with CSt paid to own government.
Since cst and vat paid are deductable expense under income tax act, one may get releif of income tax on these expense