CST on bad debt

A very interesting question,

before considering it deeply let me my first reaction that 'event of tax" occurs on the occasion of transfer of title to the goods, now just because you could not get back the sale price from the purchaser of the goods, you can not have any relaxation in so far as tax imposition is concerned.

HOWEVER IT IS PROBLEM TO BE EXAMINED IN DEPTH. The question that crops up is whether the failure to collect the sale price would be equated to 'return of the goods' or ' spoiled goods" or "retention of ownership/ title in the goods" if so what would be the impact, bye next time

The taxability of a 'CST Sale' transaction or for that matter any sale transaction is depends upon the point of 'taxable event' and thus as and when 'taxable event' of sale take place, the seller is obliged to pay tax irrespective of the fact whether the sale price is collected or not.  Only provision for deduction available is 'sale return' which should be generally within 6 months of sale in which case, the sale can be reversed. 

There is no provision of adjustment of CST paid on purchases against CST payable on sale as it would involve two different States.  However, as per VAT provisions, local tax paid on purchases is adjustable against CST payable on sale effected from the same State.

From the query, it is obseved that you are the buyer and hence is obliged to issue 'C' form if sale is obtained with concessional rate of CST.  However, if the sale of item is rejected due to poor quality or otherwise, then it is the question of negotiation with the seller concerned.