Thursday, January 19, 2012


on Thursday, January 19, 2012

Kindly Explain me to below cases
  1. Invoice raised from One state to another state, but goods delivery with in same state which tax is applicable CST or VAT? Any forms applicable?
  2. Invoice raised with in state but material delivery to another state which tax is applicable VAT or CST ?

CST is applicable On inter state sale & what is interstate sale is defined as under

Inter State Trade or Commerce In Sales Tax

A sale or purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase--

  1. Occasions the movement of goods from one state to another.
  2. Is effected by a transfer of documents of title to the goods during their movement from one state to another.(sales In transit)
Movement from one state to another:In above case when goods are given to carrier or transporter for transportation .the movement of goods starts at the time of delivery to carrier and terminated at the time when delivery is taken back from such transporter /carrier.

As per point two above CST is applicable if sale is done while goods movement from one state to another state.Its called E-1 transaction or sale in transit.

suppose: X situated in Delhi purchased goods from Y in Punjab .Y booked the material on transport and send GR/RR(goods receipt note issued by transporter) to X. X instead of receiving material from transport himself sold the material to Z in Delhi (same state) by endorsing RR/GR
in the name of Z.Z takes the delivery from the transporter .

In this case sale from Y to X is covered under CST and X to Z is also covered Under CST as sale in transit.

To complete the transaction X will issue C form to Y ,
Y will issue E-1 form to X
Z will issue C form to X

In the above case even X & Z both are situated in Delhi but the sale transaction is covered under "sale in transit" clause of CST act so CST will be applicable and vat is not be charged.

CST is applicable only if goods movement is from one state to other state .If goods movement is started from one state and ends in same state then CST will not be applicable.

The Point is to be noted here that starts and end so if the start and end of movement of goods is interstate then CST will be apply but if start and end both in same state then vat will be applicable .suppose goods start movement from x state and moved through y state but movement of goods ends in x state then Vat will be applicable.

Goods moved from one state to another state for export/Import transaction and branch transfer are not covered under CST.

so location of the parties and billing is not important but movement of goods is important to decide whether CST is applicable or VAT is applicable.

Now point wise answer to your queries
  1. As explained above if goods are moved with in the state then VAT will be applicable .No Form is required.the above situation can arise only if the seller has a branch office in the purchaser state.In this vat of the Purchaser's state will be applicable.Seller can not charge their state Vat In this case.
  2. As goods are to be moved from one state to other state so CST is applicable .No matter seller and purchaser belongs to same state.