There are various categories of sales / purchase which are  as follows:-

Interstate Sales or Interstate Purchase

Sale or purchase of goods from one state to another state is called “Interstate Sales or Interstate Purchase”.

Example:  A of Gujarat (Seller) sells Goods to B of Maharashtra (Buyer) or vice versa

CST is levied in the above case.

What is CST?

It is central sales tax; the liability to pay the tax is on the dealer who sells the goods in the course of interstate trade or commerce (i.e. from one state to another state).

CST is levied at the turnover of the dealer, there is concessional rate or no tax is charged if Declarations forms are submitted.

What is Concessional Rate?

Concessional rate is a discount given to the dealer on the turnover.

Sales tax liability on interstate sales is @ “2%” on the turnover of the dealer or 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 that rate is levied.

Otherwise the rate of tax would be the rate which is applicable on the goods sold within that state.

Such concession rate would be applicable if selling dealer provides ‘Form C’ to Tax Authorities as a Proof that the purchasing dealer is eligible to purchase these goods at concessional rate.

  1. Sale in Transit

An inter-State sale or inter-State purchase which is affected by transfer of document of title to the goods during their movement from one State to Another is called “Sale in Transit”. 

E.g:-A of Kolkata Places an order on B of Maharashtra for certain goods and instruct it to deliver it to C of Kerala and A of Kolkata dispatches the goods to C of Kerala.

In the above case sale of goods by A to C is affected by transfer of documents. Documents are transferred to C before goods reach Kerala & C takes delivery thereof.

In the above case Form C,Form E-I/E-II is applicable. For more details kindly click on the below link.

  1. Branch Transfer or Interstate Stock Transfer

Sometimes dealer sends the goods to his consignment agent to another state,so that the goods can be sold.

Similarly, a dealer may send the goods to his own branch/depot in another state from where such goods can be sold.

In the aforesaid cases, although goods have been transferred from State to another, the property in goods does not pass from principal to the agent .

Thus, there is no sale and consequently no CST is payable provided there was no pre-existing agreement for the sale of the goods so transferred.

Factory  at Gujarat  Goods are sent from Gujarat H.o to Mumbai  Branch at Mumbai

Above illustration shown is an interstate stock transfer

In the above case Form F is applicable please refer to the below link for more details :

  1. Intra state Sales or Intrastate Purchase

Sales or Purchase within the state is called Intrastate Sales or Intrastate Purchase.

Example : A of Mumbai sells goods to B of Pune and vice versa

VAT is levied in the above case.

  1. Import and Export

Sales or Purchase from one country to another country is called “Export” & “Import” respectively.

Custom duty is levied in the above case.

Please feel free to write to us at [email protected] for any queries on the above blog.

Chartered Accountant in Ghatkopar, Mumbai

About Chartered Accountant in Ghatkopar, Mumbai

A.P. Doshi & Co Chartered Accountants is practicing into Accounts outsourcing, Audit & Assurance, Direct & Indirect Taxation and Management Consultancy services since 1985. We cater to a Family owned, PE / VC Backed businesses, listed companies, Multinationals, NGOs, etc. across the globe. We have a stated policy of following holistic approach, giving complete visibility and best in class turnaround time to each client. This is achieved by bringing the technical and analytical skills to an assignment, which is developed, through the academic background, adoption to latest technology, continuing professional education and engagement experience of our team.

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