State Government cannot levy the tax on inter-State Transactions however all such transaction are administered by the State Government that’s why provisions relating to State’s VAT in many situations are applicable even in such transactions.
Although CST Act 1956 is on the verge of its end with the advent of GST as it is knocking at the door even since long and waiting to change the whole picture of Indirect Taxation in India. But still it is worth to understand & keep the discussion continue relating to the Form-C because of the fact that lot of assessment are pending for completion.
As per section 8(1) (b) of CST Act 1956 sales tax liability on inter-state sales is @ 2% or ‘rate of tax for sale within State’ whichever is lower, provided such sale is affected to a registered dealer and goods are covered in the registration certificate of the purchasing dealer. Otherwise the rate of tax would be the rate which is applicable on the goods sold within that State.
Thus CST rate @2% (i.e. concessional rate) can be claimed if :-
i. Sale has been made to registered dealer; and
ii. Goods sold are covered in the registration certificate (RC) of the buying dealer.
Such concessional rate of tax would be applicable if selling dealer produces the proof to Tax authorities that the purchasing dealer is eligible to get these goods at concessional rate. Form C is the evidence which is provided by the buying dealer to selling dealer for the said purpose, section 8(4)(a) of the Act provides that concessional rate is applicable only if purchasing dealer submits a declaration in prescribed form C to selling dealer.
Thus inclusion of goods or class of goods in the RC has important role and it must be included in RC before the goods are actually purchased and such goods must be of nature which is allowed under section 8(3) of the Act.
As per the section following type or for following purpose goods are eligible for the inclusion in RC.
Purpose for which Goods can be purchased under concessional rate (Ref;Sec 8(3))
i. Goods as being intended for re-sale
ii. For use in the manufacture or processing of goods for sale,
iii. For use in telecommunication network or in mining or
iv. For use in generation or distribution of electricity or any other form of power
v. Container or other materials intended for the packing of goods for sale ( i.e. primary packing materials )
vi. Container or other materials used for packing of any goods mentioned in para (i) or (iv) above ( i.e. Secondary packing materials)
Whether Goods need to specified in Registration certificate
Yes, such goods can be purchased, only if these are mentioned in the registration certificate of purchasing dealer. It is a mandatorily condition to avail concessional CST purchase.
Dealer should give complete list of product dealt with by him to the department while filing application for registration or for amendment in RC and he can also submit the soft copy of the list on the CD so that the same details can be uploaded by the department because in most of the States information is uploaded online now a days.
When goods should be get inserted in RC?
Before the goods are purchased. The goods must get included in the certificate of registration, before the goods are actually purchased. There are instances where even if the insertion is made at a later date but application for amendment in RC moved before purchase and the Courts have held that the amendments in R C should be from the date of application.( Orient paper mill 23 STC 308(MP) and 97 STC 102 (Pat FB))
Number of Transactions per C forms
One declaration in C form can cover all transactions in one quarter, irrespective of total amount/value of transactions during the quarter.If a transaction covers more than one quarter, separate C form is required to be issued for each quarter.
Whether Form C can cover transactions for more than one quarter?
In general ,answer is no but The Hon’ble Gujrat VAT Tribunal in the case of Sainest Tubes Pvt.Ltd Vs State of Gujrat SA NO.431/2001 judgment dated 25.03.2010, directed to authorities that if applicant produce “C-Form