CST RATE WITH / WITHOUT C FORM D FORM

SHARE:

  1. What is the percentage of CST chargeable for the sales with C-Form and without C-form ?
  2. What is the percentage of CST chargeable for the sale of goods to Government undertaking companies e.g NAL, R&DE etc ?
  3. What if goods purchased by registered dealer is not covered under his registration ,but he is ready to issue form C ?
Please clarify these things.

A Bill namely, the Taxation Laws (Amendment) Act, 2007 (Bill No. 13/C of 2007) had been introduced & passed in Lok Sabha in order to further amend the Central Sales Tax Act, 1956.and amendments done by this bill are applicable from 01.04.2007.

The net main effect of the amendments is as follows:-
  1. The rate of CST on inter-State sale to registered dealers (against Form-C) shall stand reduced from 4% to 3% or the rate of VAT applicable in the State of the selling dealer, whichever is lower.(Present rate of CST Is 2 %)
  2. The rate of CST on inter-State sale other than sale to registered dealers shall be the rate of VAT applicable in the State of the selling dealer.
  3. The rate of CST on inter-State sale to Government Departments shall also be the rate of VAT applicable in the State of the selling dealer, indicated at (b) above. The facility of inter-State purchases by Government Departments against Form-D stands withdrawn.
so after these amendments ,tax rates in various possible situation has been explained in the table given below

Chart showing CST rate with & without C FORM
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The rate of Tax under CST act has been defined under the section 8 of the CST ACT 1956.

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The rate of Tax under CST act has been defined under the section 8 of the CST ACT 1956.The section 8 has been reproduced hereunder.


8. Rates of tax on sales in the course of inter-State trade or commerce:-- 

(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section(3); shall be liable to pay tax under this Act, which shall be three per cent,* two percent of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the Sales Tax Law of that State, whichever is lower; Provided that the Central Government may, by notification in the Official Gazette, reduce* the rate of tax under this sub-section.

*Reduced to two per cent from 1st June 2008 by Notification No. S.O.1277(E) I-2008/CST E No:28/11/2007-ST dated 30th May 2008 

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State. 

Explanation:- For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law: 

(3) The goods referred to in sub-section (1):--- 
  • (a) (Deleted from 1st April 1963); 
  • (b) are goods of the class or classes specified in the Certificate of Registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any Rules made by the Central Government in this behalf, for use by him in the manufacture of processing of goods for sale or  in the telecommunications network or in mining or in the generation or distribution of electricity or any other form of power;  
  • (c) are containers or other materials specified in the Certificate of Registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale; 
  • (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (b) or for the packing of any containers or other materials specified in the Certificate of Registration referred to in clause (c). 
(4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed Form obtained from the prescribed authority. Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit. 

(5) Notwithstanding anything contained in this section, the State Government may, on the fulfillment of the requirements laid down in subsection (4) by the dealer if it is satisfied that it is necessary so to do in the public interest, by Notification in the Official Gazette, and subject to such conditions as may be specified therein, direct
  • — (a) that no tax under this Act shall be payable to any dealer having his place of business in the State in respect of the sale by him, in the course of inter-State trade or commerce, to a registered dealer from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) may be mentioned in the Notification; 
  • (b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the Notification, which are made in the course of interState trade or commerce, to a registered dealer by any dealer having his place of business in the State or by any class of such dealers as may be specified in the Notification to any person or to such class of persons as may be specified in the Notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) as may be mentioned in the Notification. 

(6) Notwithstanding anything contained in this section, no tax, under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce, to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, reengineering, packaging or for use as packing material or packing accessories in an unit located in any special economic zone, or for development, operation and maintenance of special economic zone by the developer of the special economic zone, if such registered dealer has been authorized to establish such unit or to develop, operate and maintain such special economic zone by the authority specified by the Central Government in this behalf. 

(7) The goods referred to in sub-section (6) shall be the goods of such class or classes of goods as specified in the certificate of registration of the registered dealer referred to in that sub-section.

(8) The provisions of sub-sections (6) and (7) shall not apply to any sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the prescribed authority referred to in subsection (4) a declaration in the prescribed manner on the prescribed form obtained from the authority specified by the Central Government under subsection (6), duly filled in and signed by the registered dealer to whom such goods are sold]. 

Explanation:-- For the purposes of sub-section (6), the expression “special economic zone” has the meaning assigned to it in clause (iii) to Explanation 2 to the proviso to Section 3 of the Central Excise Act, 1944 (1 of 1944).

Accordingly Point wise answer to your queries are given here under
  1. Sale with C-form :Rate of CST or Vat rate for that goods of seller's  state,  whichever is less will be applicable .In case of sale without form C :Vat rate of seller's state is applicable.
  2. Sale of Govt Department is now treated like a unregistered dealer so Vat rate of the seller's state is applicable in sale to Govt Departments.However state department may registered with the respective sales tax department .
  3. The C form can be issued for goods of the class or classes specified in the Certificate of Registration of the registered dealer purchasing the goods .So technically ,In present case he can not issue form C ,so rate applicable in selling state is applicable ( read subsection 3 of section 8 of CST ACT above 


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