Declaration Forms Under Sales Tax

What is Declaration Forms?

A dealer has to issue certain declarations in prescribed forms to buyers/sellers (such as Form C,D,H,F,E-1,E-II,I).

 Dealer has to issue declarations in the forms printed and supplied by the Sales Tax authorities only.

 These forms are issued  in triplicate two. [Form D was to be issued by Government and can be printed/typed by the Government department making purchases. Now form D has been abolished w.e.f. 1-4-2007].

 What is the importance of Declaration Form?

The declaration form is required to get the benefit of concessional rate or no tax is required to be paid. If Declarations forms are not submitted with the respective sales tax department the dealer will have to pay the tax at the rate of tax which is applicable on the goods sold within that state.

Another question would arise is who would be able to transact on Declaration Forms?

The concessional rate against declaration form can be claimed if:-

  1. Sales has been made to a registered dealer.
  2. Goods sold are covered in the registration certificate (RC) of the buyer.
  3. The buyer who files the CST Return i.e the buyer has to show in his returns the CST Purchases made by him.(the buyer cannot issue declarations forms of the purchases which are not disclosed by him in return and will have to pay the tax at the normal rates).

 

Most often question arises which goods are eligible to be registered under (RC)?

 Purpose for which Goods can be purchased under concessional rate : 

  1. Goods as being intended for re-sale.
  2. For use in the manufacture or processing of goods for re-sale.
  3. For use in telecommunication network or mining or
  4. For use in generation or distribution of electricity or any other form of power.
  5. Container or other materials intended for the packing of goods for sale(i.e. packing material).
  6. Container or other materials used for packing of any goods mentioned in pt 1 to 5 above (i.e. Secondary packing material).

Various types of Declaration Forms are as follows:-

 “C” Form:-

 Form “C” is issued by a registered dealer (purchaser) to seller of goods in case of CST so as to charge him sales tax at lesser rate (i.e. concessional rate).

The rate of tax on interstate sales is governed by Central Sales tax Act and if the sale is made to a registered dealer of the state then the rate of tax is 2% but the registered dealer (i.e.) the purchaser have to supply C-form to the seller.

The rate of tax without C-form in case of interstate trade or commerce is equal to the rate of tax applicable in the state of the seller.

In fact C-form is the proof that the sales is made to a registered dealer of another state

“H” Form:-

Form “H” is issued by Merchant exporter to supplier and it is obligatory for the merchant exporter to export material outside India.

No Vat/CST is applicable.

In other words, H Form acts evidence that the purchased goods are only for export purpose .

Note :-Bill of lading need to be attached with H form copy as a proof that the purchased material are exported.

 “E1/E2” Form

E1 Form :-This form is issued by the dealer who makes the first inter-state sale during movement of goods from one State to another. This enables the purchaser to claim exemption from CST on the second inter-state sale during the movement of goods by transfer of documents of title.

  • Buyer (Hyderabad), B – seller (Bangalore). It is the first sale of any particular goods. Then B will issue form E1 to A.

E2 Form:- This form is issued by the second or the subsequent seller when the goods move from one state to another in a series of inter-state sales by transfer of documents of title. This form enables the purchaser to claim exemption form CST on subsequent sale of goods.

A- Buyer of original goods now seller, C- new buyer (Chennai). Here A is selling same goods again in interstate trade it is subsequent sale. Then A will issue form E2 to  C.

These forms are issued in case of Sale in transit.

 In case of sale in transit C form provisions apply to E1/E2 Form:-

 Illustration:-

X Co.(Maharashtra) place order to Y Co (Kerala)  for a material and Y Co (Kerala)  Place order for that material to Z Co. (Chennai )and inform to supply directly to X in Maharashtra .

Here X is purchaser of Y and Y is the purchaser of Z and Y asking Z to give the ownership of material to X instead of .This is sale in transit.

 Here Consigner is Z and Consignee is X, also other than C form there is E-1 and E-2 form .

 Y purchaser of Z will give C form to Z in exchange of E-1 and Y the seller of X will get C form from X the purchaser.

If X sells that material to ‘A’ in Maharashtra and give ‘A’ E-II form and he will charge 0% tax. This is to avoid double taxation. 

“F” Form:-

 Form “F” is issued against transfer of goods from one state’s godown to another state’s godown.(Within the same company) .

In other words F Form is evidence in case of Branch Transfer of goods or interstate stock transfer

 When to submit the declaration forms?

 Declaration forms can be submitted to the assessing authority within three months after the end of period to which it relates and after filing of Returns.(Forms are applied & issued on quarterly basis).

 How much number of forms to be issued?

 There are three parts of the declaration form (Original, Duplicate & Triplicate) :-Original is to be submitted to the department, Duplicate will be retained by seller and Counterfoil with the buyer.

What documents need to be submitted with Declaration Forms?

 

  • C Form & F Form doesn’t require any separate documents.(As now Forms are applied online, so no need to attach invoice data separately).

 

  • H Form -Bill of Lading need to be attached i.e mentioned in H form application.

 

  • E1/E2 form advisable to attach C form against which E1/E2 forms are issued.

 

Please feel free to write to us at [email protected] for any further 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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