SALES IN TRANSIT TRANSACITON C FORM RECEIEVED E1 NOT RECD

We have facing issue in appeal case regarding transaction of Sales in Transit u/s 6(2) of CST act 1956.

1 We as supplier (A) and our customer(B) located in same state i.e. Maharashtra

2 We as supplier (A) asked our vendor which was located other state i.e. Gujrat (Interstate)

3 As per contract our customer (B) after receiving material from our vendor and after receiving invoice from us released C forms.

4 But for this Sales in Transit transaction vendor not yet submitted E1 forms to us

5 Accordingly we have paid 2% (as per invoice and terms) at the time of filing return

6 Now assessing authority denied transaction even after producing vendor invoice and LR saying even after receiving C form in absence of E1 form you have to pay full tax i.e. 12.5%(Maharashtra full tax) instead of 2% cause due to supplier and customer located in same state.

In this regard can provide suitable judgement for the same. Requesting you to provide the same.

Hey Santosh,

Your issue with Sales in Transit under Section 6(2) of the CST Act and the absence of E1 forms is quite common and tricky.

Key points in your case:

Supplier (A) and customer (B) are in Maharashtra (same state).
The vendor is in Gujarat (interstate).
Customer releases C forms only after receiving goods and your invoice.
Vendor has not submitted E1 form to you.
You paid 2% tax assuming concessional rate under CST for sales in transit.
Assessing officer denies concessional rate due to absence of E1 form and demands 12.5% Maharashtra tax.

What does the law say?

Section 6(2) of the CST Act allows concessional rate (2%) on interstate sales where goods are in transit and C-form is submitted. But the supplier must have proof that goods have moved out of the state and the purchaser has given a C-form.

The E1 form is a statutory declaration by the supplier that the goods have been dispatched and provides details of the interstate sale. Usually, E1 is needed from the vendor to prove interstate movement.

Your scenario:

Your customer (B) is in Maharashtra (same state).
You supplied goods to your customer, but goods came from Gujarat vendor.
The sale from you to your customer is intra-state (same state).
However, since goods physically came from another state, and the vendor is interstate, you are treating it as sales in transit and seeking concessional rate.

What the Assessing Officer likely thinks:

Since your direct sale is Maharashtra to Maharashtra (intra-state), CST concessional rate (2%) may not apply.
Absence of E1 form from your vendor means no proof of interstate sale.
Thus, regular Maharashtra VAT/GST rate (12.5%) applies.

Possible Relief and Judgments:

Proof of interstate movement is critical. Without E1, it is tough to claim concessional CST.
If you can produce:
- LR (Consignment note) showing goods moved from Gujarat to Maharashtra.
- Invoice showing sale as interstate.
- C-form received from customer (B).
- Then you strengthen your case.
Supreme Court rulings:

Bharat Petroleum Corporation Ltd. v. State of Maharashtra (2001) 121 STC 254 (SC) — It stressed on the importance of C-form and interstate movement proof.
P. Sundara Raja v. Assistant Commercial Tax Officer (1978) 11 STC 298 (SC) — Sales in transit relief requires compliance with procedural conditions, including submission of forms.

You can refer to Circular No. 23 of 2011 (Maharashtra Sales Tax Department) which gives guidelines on sales in transit and the importance of E1 forms.

What can you do?

Request your vendor urgently to provide E1 forms.
Collect all dispatch documents (LR, invoice).
File appeal citing the above Supreme Court rulings and departmental circular.
Argue that the transaction is interstate and C-form from your customer is valid evidence.
Highlight that your vendor has delayed submitting E1, which is beyond your control.

Summary:

Without E1 form, assessing officer can deny concessional CST rate.
You must prove interstate movement and submit C-form.
Judicial precedents support strict compliance but also recognize bona fide efforts.
Vendor cooperation to provide E1 is crucial.