CST Requirements and

Practical Issues

Presentation by

CA Rajat Talati
rajat@[Link]
rajat@talatico
com
On 13.07.2013
Ahmedabad branch of WIRC of ICAI

Definitions
Sec 2(g) Sales
Transfer of property in goods by one person to another for
cash or deffered payment or any other valuable
consideration,, and includes :
Transfer other than in pursuance of a contract
Transfer of property in goods involved in execution of
works contract
Hire
Hi purchase
h
sale
l or installment
i t ll
t sales
l
Transfer of the right to use any goods for any purpose
Supply of goods by any unincorporated body to
members
Supply + service of food at restaurant
Excludes : Mortgage , hypothecation, Charge, pledge
CA RAJAT TALATI

Definitions
Sec
S 2(h) Sales
S l Price
P i
Sales Consideration For Goods
xx
( )Cash Discount
(-)Cash
(xx)
(+)Charges for anything done at
xx
the time of or before the delivery
y
of goods (Excl. cost of freight or delivery or cost of
installation when separately charged)

Sales Price

xx

CA RAJAT TALATI

Definitions
Sec 2(h) Sales Price : In
I case off transfer
t
f

in property in goods involving the execution of

works contract
Total Consideration for the
works contract
(-) Deductions as may be
prescribed
Sales Price

CA RAJAT TALATI

xx
(xx)
xx

Definitions
Sec
S 2(j) Turnover
T
off Sales
S l :

I means
It

aggregate of the Sales price

received
d and
d receivable
bl b
by the
h d
dealer
l
in respect of any goods
in the course of inter-State sales

CA RAJAT TALATI

Goods Of Special Importance In

Inter State Sales
Sec 14 Declared Goods
It includes goods like
Cereals p
paddy
y , rice , wheat,, J
jowar,bajra,maize,ragi etc
Coal (excl. charcoal)
Cotton (excl
(excl. cotton Waste)
Cotton Yard (excl. cotton yarn waste)
Crude Oil

CA RAJAT TALATI

Goods Of Special Importance In

Inter State Sales
Hides & Skin (raw or dressed state)
Iron and steel
LPG for domestic use Oilseeds
Pulses
Aviation Turbine Fuel sold to an
aircraft operated by scheduled
airlines (subject to certain
conditions)
diti
)

CA RAJAT TALATI

Goods Of Special Importance In

Inter State Sales
Goods covered under the prescribed
headings of the CET Act 1985 such as
Man made fabrics
Sugar
Woven fabrics
Cotton fabrics
Crude Oil
Hides & Skin ((raw or dressed state))
Iron and steel
LPG for domestic use
CA RAJAT TALATI

Goods Of Special Importance In

Inter State Sales
Sec 15 Restrictions on sale or purchase

Tax payable on intrastate sales and purchase of

declared goods shall not exceed four percent
Tax paid on sales and purchase in the course of
inter state sales of declared goods which are
purchased locally shall be reimbursed to person
making such interstate sales
Tax
T
llevied
i d on sale
l off rice
i which
hi h is
i procured
d outt
of paddy as referred in prescribed clause of
section 14 shall be reduced by the tax paid in
such paddy

CA RAJAT TALATI

Recognition of interstate sales and

purchase
Sec 3

Interstate sales or purchase is deemed to

place when :

take

Occasions the movement of goods from

one state to another; or
Transfer of documents of title to the
goods during their movement from state
to another

10
C.A. RAJAT TALATI, MUMBAI

Recognition of interstate sales and

purchase
Sec 3

Exp 1.
When goods are delivered to carrier or other
bailee the movement of goods for the purpose of
clause (b) shall be deemed to commence at the
time of such delivery and terminate at the time
when delivery is taken from such carrier
Exp 2.
2
When the movement of goods commences and
terminates in the same state it shall not be
regarded as interstate sales if the goods while
movement pass through the territory of any other
state

CA RAJAT TALATI

11

Rate of Tax in the course of

interstate sales
S
Sec
8
Every dealer who commences interstate sales
to a registered
g
dealer of g
goods described in
sub-section(3) shall be liable to pay tax at two
percent of his turnover or at rate applicable to
the sales or purchase of such goods inside the
appropriate Sate under the sales tax law of the
state whichever is lower
If interstate sales are not supported by
declaration in form C sales of such goods will
be taxed at a local rate applicable

CA RAJAT TALATI

12

Determination of turnover
Sec 8(A)

The following deductions shall be made from

the aggregate of the sales price:

When no tax is collected by the dealer

Rate of tax*aggregate of sales prices

100(+) rate of tax

Goods returned by the purchaser

within six months
production of satisfactory evidence

Such other deductions as prescribed by

the Central Government

CA RAJAT TALATI

13

Sale or purchase in the course of

import or export

S
Sec
5(1)
Sale in the course of export:
Sale
S l or purchase
h
occasions
i
such
h exportt OR
Effected by transfer of documents of title of goods
After the goods have crossed the customs frontiers of
India

CA RAJAT TALATI

14

Sale or purchase in the course of

import or export

S
Sec
5(2)
Sale in the course of import :
Sale
S l or purchase
h
occasions
i
such
h import
i
t OR
Effected by transfer of documents of title of goods
Before the goods have crossed the customs frontiers of
India

CA RAJAT TALATI

15

Sale or purchase in the course of

import or export

Sec 5(2)

Sale in the course of import

There should be Agreement of sales in the course of
import
Such agreement should occasion imports
The agreement date should be before the B/L date
The BOE may or may not be in the name of the importer

High seas sales

There should be High Seas sales Agreement
The B/L should be endorsed in favour of the final
purchaser
The BOE should be in the name of high seas buyer

CA RAJAT TALATI

16

Sale or purchase in the course of

import or export

S
Sec
5(3)
Sale in the course of export (Deemed
E
Export
t/P
Penultimate
lti
t sale):
l )
Last sale or purchase preceding the
export
If such sale or purchase is for complying
with the agreement or order for or in
relation
l
to such
h export

CA RAJAT TALATI

17

Sale or purchase in the course of

import or export

Sec 5(4)

Declaration forms with regards to sale in the

course of export (Deemed Export / Penultimate
sale):
the dealer has to furnish to the prescribed
authority in the prescribed manner a declaration
duly filled and signed by the exporter
Documentation
D
t ti
Form H
Export documents i.e. airway bill , B/L
Proof
P oof that e
export
po t o
order
de was
as placed before
befo e
the purchase i.e. purchase order placed by
foreign buyer on the exporter
py of the PO of the importer
p
required?
q
Is copy
CA RAJAT TALATI

18

Sale or purchase in the course of

import or export

S
Sec
5(5)
Aviation Turbine Fuel purchased
By Indian carrier
For its international flight purchases
S h purchases
Such
h
shall
h ll be
b deemed
d
d to
t take
t k place
l
in the course of exports

CA RAJAT TALATI

19

BRANCH TRANSFER
Sec
S 6A CST Act
A t
Transfer to Branch/ HO/ agent out side
the state other wise than sale
Deduction to be claimed from TO
Production of F Form- 1 for 1 month
transactions
Non- Production of F form Deemed as
inter- state Sale
Deeming Provision is it constitutional
Can
C
fform C b
be produced
d
d iin case off disallowance
di ll
CA RAJAT B TALATI

25

BRANCH TRANSFER -instances

instances

FG to Br. / HO
FG to Con Agent
RM/FG to factory for processing
Fixed Assets
RM / PM to 3TP for processing / job work

Ambica Steel Ltd (24:VST:356)(SC),

Maharashtra Cir. No.2T/2010 dt.11.01.2010
w.e.f 11.1.2010 (compulsory)
Earlier instructions withdrawn
Mah Cir16T of 2007 dt. 20.02.2007
Mah Cir 5T of 2009 dt. 29.1.2009

For use in W/C in other states

CA RAJAT B TALATI

21

BRANCH TRANSFER
Br.
Br Trf return with in 6 months
Is form F required?
Yes

Stock transfer OMS rejection / GR. F

from is must for both to & fro movements.
Mah Circular 2T/2010 dt.11.1.2010
F form reqd even for G/R and jobwork

STM out to URD agent / Branch

F form for URD period
If Subsequently registered
CA RAJAT B TALATI

22

BRANCH TRANSFER
Rate of tax on Br Trf.
Trf Disallowed
On what value? Transfer value?

Dispatch & receipt in different months

Cir. [Link]..
Valuation of stock transfers
Transaction value
MRP less std %
Excise clearance value
No commercial value
Fixed assets
CA RAJAT B TALATI

23

Br Trf.
Br.
Trf v/s inter
inter-state
state sales
Status of branch / depot & its functioning
Power to appropriate goods

Order processing
H.O. processes & issues instruction
p
g
P.O. processing
Credit control
Reporting of salesmen / field staff
Receipt of payment

CA RAJAT B TALATI

24

Br Trf.
Br.
Trf v/s inter
inter-state
state sales
One to one correspondence
Stock movement
product mix
Std goods v/s customised goods

Dispatch quantity
Std qty dispatch
Mass dispatches / dispatches in economic qty
size
Seasonal dispatches

Labeling on goods
Floating stock
CA RAJAT B TALATI

25

Br Trf.
Br.
Trf v/s inter
inter-state
state sales
Agreement
Agreement to sale
sale v/s sales
sales agreement
agreement
Inspection of goods

At factory during mfg process

At factory on completion of mfg
Testing before dispatch by ultimate customer
3rd party testing Govt approved agencies

Coloured transactions

CA RAJAT B TALATI

26

6(2) Intransit sale

Sec 3(b) of CST r/w sec 6(2) of CST Act
Section 3(b)
Section 6(2)
Trf of documents of title to the goods
Documents of title to the goods
L/R,
L/R R/R,
R/R B/L,
B/L Airway bill,
bill any other
documents e.g. courier receipts
Such documents should be negotiable /
transferable.
Airway bill is not negotiable
CA RAJAT B TALATI

27

6(2) Intransit sale

During
D i
their
th i movementt
Endorsement during their movement
Practicle difficulties passing of CENVAT
credit, goods directly getting delivered etc
M/s.
/ A & G Projects
j
And Technologies
g
Ltd.
Vs State of Karnataka [2009] 19 VST 239
(SC) Dated 11/12/ 2008

CA RAJAT B TALATI

28

6(2) Intransit sale

Exchange of declarations
W sales to X , X to Y & Y to Z
W taxable sales u/s 3(a) & others exempt U/s
3(b)
W
C
X
form in
in
Karna
MP
taka
E-I
form

C form Y
C
form
in
West
Bengal
E II
E-II
form
E-II
form
CA RAJAT B TALATI

Z
in
Orissa

29

6(2) Intransit sale

Taxability of 6(2) transaction
Non-receipt of forms levy of tax
PRODUCT TAX RATE

STATUS OF THE TRANSACTION

4%

12.50%

TAX RATE APPLICABLE

C & E1 BOTH NOT RECD

A per the
As
th original
i i l trans
t

C RECEIVED E1 NOT RECD

2%

2%

E1 RECEIVED C NOT RECD

4%

12.50%

C & E1 BOTH NOT RECD

4%

12 5%
12.5%

CA RAJAT B TALATI

30

A & G Projects (SC)

(19:VST:239)???????????
Facts
A &G Projects (Karnataka) PO on manufacturing at TN &
supplies directly to KPTCL Karnataka
Admittedly, 3 inter
inter-sales
sales covered by sec 3(a) [page 244
para 9]
Held
All transactions are inter- state sales from TN
Is it setting principals wrt 6(2) sales?
No.
Ratio is in respect
p
to Sec 9(1)
( ) appropriate
pp p
state
M/s. Ajay Trading Company Vs The State of Maharashtra VAT
SECOND APPEAL No. 111 OF 2010 Dated 12/12/2012

CA RAJAT B TALATI

31

FORMS C,H,E1,EII,F
C H E1 EII F & Other FORMS
For what C
C form could be issued?
[Sec8(3)]
To be issued by RD or Central Govt.
Specified
p
in registration
g
certificate
INTENDED FOR
Resale by him
For
F use b
by hi
him in
i th
the manufacturing
f t i
or
processing of goods for sale.

32
C.A. RAJAT TALATI, MUMBAI

For what C form could be issued?

[Sec8(3)]
To be issued by RD or Central Govt.
Govt
Specified in registration certificate
INTENDED FOR
Resale by him
For use by him in the manufacturing or
processing of goods for sale.
sale
In the telecommunications network
In the generation or distribution of electricity or
any other form of power.
power
Packing material intended for being used as
packing goods for sale
CA RAJAT TALATI

33

C Form
F
CST Rules (central)
12(1)- one C form for one Qtr. (w.e.f. 1.10.06)
Mah Cir no. 28T/2005 dt 24.10.05 to submit
only list of forms not recd. (para 5) Originals
to be produced at the time of Assessment.
Above Rule applies to E I & E II also (Rule 9(b))
Loss of C form
Elaborate procedure , Indemnity, Notification
etc.
C form for URD period?
Can be issued from the state where registered
[rule 12(7)]

CA RAJAT TALATI

34

Form F
Purposes
P
Not mentioned in Sec 6A
Not
N t provided
id d iin R
Rule
l 12(5)
Form F
Certificate for receipt & accounted for.
for

CA RAJAT TALATI

35

Forms - H,I & J

Penultimate sale to exports [Sec 5(3)]
Form H
Can be produced till the Assessment [rule
12(10)]

Inter-state Sales to SEZ

Form I
Scheme to claim reimbursement of CST paid on
purchases
pu
a
from
o Cent. Govt.
Go

Sales to Diplomatic mission

Form J
CA RAJAT TALATI

36

Levy and collection of tax and

penalties

S
Sec
9
Tax Payable on interstate sales turnover
(2)Authority
(2)A th it can assess and
d reassess ttax collected,
ll t d
interest , penalty
(2B)The dealer does not pay tax in time he shall be
t pay tax
to
t
as per the
th generall sales
l tax
t
law
l
off each
h
state

CA RAJAT TALATI

37

Levy and collection of tax and

penalties

Sec 10
If any Person
Furnishes declaration forms which he believes to
be false
After purchasing goods for the specified purpose
fails to use those goods for that purpose without
reasonable excuse
Falsely represents purchasing goods of class
covered by his certificate of registration
URD represents himself as RD and collects tax etc
Shall be liable to Penalty
y
CA RAJAT TALATI

38

Penalty in lieu of prosecution

(Sec.10A) Misuse etc. C form
Upto
U t one & h
half
lf times
ti
the
th tax
t
as per
Sec 8(2)
For
Fo mis-use
mis se of fo
forms
ms C other
othe than
the intended purpose
Goods not mentioned in registration
certificate
Falsely
y represents
p
as RD

CA RAJAT TALATI

39

Authority to settle disputes

Sec
S
18A -Appeal to highest authority of state
Issues relating to
Rate of tax
Computation of assessable turnover Penalty
Time Limit for appeal -60 days from the date of
the order
Pass appropriate order after giving opportunity of
being heard
Time Limit for hearing and deciding 6 Mnths from
the date of appeal

CA RAJAT TALATI

40

Authority to settle disputes

Sec 1919 Central Sales Tax Appellate Authority

Authority to settle inter-state disputes Central Sales Tax

Appellate Authority
Consist
s st o
of
Co
Chairman Retired judge of the SC or a retired chief
justice of a HC
Officer of ILS
Officer of SG not below the rank of secretary or officer
of CG not below the rank of additional secretary
What Appeals would be filed before CSTAA?
Disallowances of Br. Trf getting taxed in both the
states
How practical is this?
Appeal may involve other issues HSS, C Form
Production etc.
CA RAJAT TALATI

41

Authority to settle disputes

Sec 20

An appeal shall lie to the authority

against any order passed by the highest appellate

a tho it of the state
authority
determining the issues relating to inter state stock
transfer Or interstate consignment of goods

Time limit

within 90 days from the date of the order served

within 150 days if the appellant has sufficient
cause from filling the appeal in time

Application Quadruplicate -fee Rs5000/-

CA RAJAT TALATI

42

CA RAJAT TALATI