Section 6 of cst
hiren
(Querist) 25 October 2013
This query is : Resolved
Dear Sir,
Party A(Gujarat) Sales to party B(Gujarat) and then party B(Gujarat) sales to party C(Hariyana). Now, Party B(Gujarat) instructed to party A(Gujarat) to deliver the goods directly to party C(Hariyana) under "sales in trasit " under section 6 of CST Act.
Now, my question is whether "A" will charge CST or "B" will charge.....?
Again my question is who will issue form C to whom...?
R.K Nanda
(Expert) 26 October 2013
contact tax lawyer.
Anirudh
(Expert) 26 October 2013
Your understanding of sales in transit under Sec. 6 of CST Act, is faulty.
Since Party A sells to party B - both are in Gujarat, there is no inter-state sales. Therefore A will charge normal Gujarat VAT when it sells to B.
If B sells to C in Haryana, then C has to charge CST at concessional rate, provided C at Haryana gives Form-C to B.
Since there is only one Interstate Sale between B and C, the question of sale in transit simply does not arise.
hiren
(Querist) 26 October 2013
But dear sir, it is is interstate sales as A will directly deliver the goods to C.
Rajendra K Goyal
(Expert) 26 October 2013
Whether A would do direct billing to C or to B.
Anirudh
(Expert) 26 October 2013
For B to C it is an inter-state sales, because the goods go out of Gujarat to Haryana. But in respect of Sales from A to B it is local sales as it is taking place within the State of Gujarat.
The situation would be different, if B was outside the State of Gujarat, and first gets the goods from A and while the goods are in transit then B sells to C. That is not the situation in the facts revealed by you.
hiren
(Querist) 28 October 2013
Sir, "A" will invoice to "B" and hten 'B' will invoice to 'C' under goods in transit as the delivery of goods will directly from "A" to "C".
Anirudh
(Expert) 28 October 2013
Pl. appreciate, when A sells goods to B, pursuant to the said sale, there is no movement of goods from one state to another. It remains within the same state i.e. Gujarat to Gujarat. Therefore there is no inter-State sales in the first place. It is only when B sells the goods to C who is outside Gujarat, there is an inter-State Sales and that is the first stage inter-State sales and not a second stage (which one calls it as sales in transit).
R K JAIN
(Expert) 28 October 2013
"A" will issue E-1 form to "B" and "B" will issue C Form to "A" and "C" will issue C form to "B". B will get the exemption under section 6 after submission of E-1 and C Form. This sale will be treated under section 3(b)of The CST Act, 1956.
Anirudh
(Expert) 28 October 2013
Dear Mr. R.K.Jain,
Please confirm whether the first sale by A in Gujarat to B in Gujarat is an inter-State sale.
R K JAIN
(Expert) 28 October 2013
Dear Anirudh,
The buyer and seller can be in the same state, sale will be inter state sale, if sale occasions movement of goods from one state to another.
hiren
(Querist) 28 October 2013
Yes Mr. R K Jain Sir, You are right. Mr. Anirudh is not clear or might not be understand the transaction what we want to say.
hiren
(Querist) 28 October 2013
Hello Mr. R K Sir,
You told that A" will issue E-1 form to "B" and "B" will issue C Form to "A" and "C" will issue C form to "B". B will get the exemption under section 6 after submission of E-1 and C Form. This sale will be treated under section 3(b)of The CST Act, 1956. But my question is how "B" can show in his return as CST or VAT sales...? and other one is "B" has not charged any CST on his invoice so how can "C" will give form-c...?
R K JAIN
(Expert) 29 October 2013
Dear Hiren,
Form C is given for inter state sale, it does not matter whether CST is charged on the bill or not. CST has to be paid once from the state where the goods started for sale and the sale in between will be exempted under the CST Act and there is no question of charging of CST by the parties involved for sale of goods in between. VAT and CST Act are different and have the separate provision for treating the sale in transit.
hiren
(Querist) 29 October 2013
Thank you so much R K Jain Sir.
