Sale-in-transit (e-1 transaction)

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"A" is a seller in Rajasthan, "B" is the customer of A in Ahmedabad, "C" is the ultimate buyer in Ahmedabad. "A" raises an invoice by keeping "B" as the "Buyer" and "C" as the "Consignee". A charges 2% CST in the invoice. This is an E-1 transaction u/s 6(2) of CST Act. "B" raises a commercial invoice on "C" selling the goods by without adding any profit and charging any tax(subsequent sale is exempt). All formalities of E-1, C form and transfer of LR [u/s 3(b)] has been done between the parties. My question is: The CST paid is the cost of "B" or "C" ? Who will record the CST charged? "B" or "C"? Can "B" recover the amout of CST paid by him from "C" by separately charging CST of the same amount in the invoice of Basic Cost issued by him to "C"? Or will it be proportionately included in the cost/unit in the invoice?
Replies (3)

A is the seller.

B is the customer.

A has acted on the instructions of B to deliver the goods to C directly. For C, no tax shall be payable since it gets covered in the second leg of the transaction.

 

CST @ 2% shall be recorded in the books of B , since for A the basic transaction is the delivery of goods by A in Rajasthan to B in Gujarat. The delivery of goods to C is a subsequent instruction by B to A .

 

Also CST is levied when there is an occasioning of movement of goods from one state to another state , which in current case is happening from Rajasthan to Gujarat.

Sir, what if, there is no presentation of E-1 form by 'A' to 'B' ?? Can 'B' charge VAT in the sales invoice from 'B' to 'C' ??
If there is no presentation of E-1 form then the transaction would be treated as if the sale happened witin the state and the tax would be collected by the department at RNR of the state.


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