Mr. Prashant,
This is a debatable issue. I am also trying to find out a solution in order to follow a procedure in this case. It is my considered view that C form should be issued on the date of Invoice of the supplier on the following reasons:-
1. Sec 2(b) of the CST Act, 1956 defines a dealer means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods, directly or indirectly for cash, or for deferred payment, or for commissions, remuneration or other valuable consideration, Sec. 2(d) defines goods, Sec.2 (g) of the said Act defines sale, and Sec. 3 defines Interstate sale or purchase. According to Sec.6 (1), a dealer is liable to pay tax on sale of goods in the course of Interstate trade or commerce. So seller of goods is liable to pay tax on interstate transaction. Sec. 8 (1) prescribes lower rate of tax. The liability to pay tax is on the dealer who sells the goods. A registered dealer can collect tax according to CST Act & Rules made there under. It is not necessary to collect tax but he is liable to pay tax under the Act in which State he is registered.
2. If the sale is to a registered dealer the rate of tax is 2% against C form or rate applicable on such goods inside the State from where the goods are sold, whichever is lower. According to Sec.8 (4) (a), a purchasing dealer is entitled to get concessional rate of tax at 2%, if he submits C form declaration to the selling dealer as prescribed in the Act and Rules framed there under. As stated earlier, selling dealer is liable to pay tax on interstate sale in the State of origin of the goods available for movement. If the purchasing dealer is not providing C form declaration to the seller, full rate of tax due on the sale turnover is liable to pay by the selling dealer in the appropriate State. It was held in Commercial Tax Officer Vs. Kowin Conductors (1998) 110 STC 472 that in the absence of C form declaration full rate of tax is payable.
3. Now all the CST statutory declaration forms can be down loaded from the web site of Commercial taxes department of each State. In Kerala, every dealer is liable to upload his purchase details of each month including interstate transactions in his monthly return and he can generate the C form from the web site. Now C form shall be issued in quarterly basis and no pre-printed forms are available..
4. It is my considered view from the above discussions that a purchasing dealer who is required to avail concessional rate of tax @ 2%, he should issue C form to the seller based on his invoice in order to limit his tax liability in the State of origin. If the purchasing dealer is not providing C form as stated in CST Rule 12(1) specifying the particulars of bill or cash memo or challan such as date, Number and amount, there is every chance to reject the C form by the assessing authority of the seller. In such circumstances, the seller is liable to pay higher rate of tax, interest and penalty. It will create unnecessary litigation between the purchaser and seller. It is most important to note that seller is granting the concessional rate and he is liable to pay tax in the absence of proper C forms. In order to maintain better business relationship, the purchasing dealer is liable to issue the C form on the invoice date. It may kindly note that issue date of the C form is immaterial in this case.
