Central sales tax C-form issue

prashant bagul	There is a lot of confusion regarding the issue of Form "C" whether on Invoice date of material receipt date especially from Issuing Companies. The Seller often asks for C form based on the Invoice date and many customers are debating that since the material is received by them in next quarter or especially in case of year end transactions wherein the material is received by the Customer in different financial year say in April end etc. In such case they are not ready to issue form c in previous financial year. Despite of insisting that the Invoice date is the criteria for issue of form "c" .they say that it will be issued only in next financial year. i.e.material receipt month. Kindly advise especially year end transaction issue. Is there any case law? Regards, Prashant

Posted 2 days ago

V.Devananda Narasimham

Mr. Prashant,        This is a debatable issue. I am also trying to find out a solution in order to follow a  procedure in this case. It is my considered view that C form should be issued on the date of Invoice of  the supplier on the following reasons:- 1.      Sec 2(b) of the CST Act, 1956 defines a dealer means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods, directly or indirectly for cash, or for deferred payment, or for commissions, remuneration or other valuable consideration, Sec. 2(d) defines goods, Sec.2 (g) of the said Act defines sale, and Sec. 3 defines Interstate sale or purchase.  According to Sec.6 (1), a dealer is liable to pay tax on sale of goods in the course of Interstate trade or commerce. So seller of goods is liable to pay tax on interstate transaction. Sec. 8 (1) prescribes lower rate of tax. The liability to pay tax is on the dealer who sells the goods. A registered dealer can collect tax according to CST Act & Rules made there under. It is not necessary to collect tax but he is liable to pay tax under the Act in which State he is registered. 2.      If the sale is to a registered dealer the rate of tax is 2% against C form or rate applicable on such goods inside the State from where the goods are sold, whichever is lower.  According to Sec.8 (4) (a), a purchasing dealer is entitled to get concessional rate of tax at 2%, if he submits C form declaration to the selling dealer as prescribed in the Act and Rules framed there under. As stated earlier, selling dealer is liable to pay tax on interstate sale in the State of origin of the goods available for movement. If the purchasing dealer is not providing C form declaration to the seller, full rate of tax due on the sale turnover is liable to pay by the selling dealer in the appropriate State. It was held in Commercial Tax Officer Vs. Kowin Conductors (1998) 110 STC 472 that in the absence of C form declaration full rate of tax is payable. 3.      Now all the CST statutory declaration forms can be down loaded from the web site of Commercial taxes department of each State. In Kerala, every dealer is liable to upload his purchase details of each month including interstate transactions in his monthly return and he can generate the C form from the web site. Now C form shall be issued in quarterly basis and no pre-printed forms are available.. 4.      It is my considered view from the above discussions that a purchasing dealer who is required to avail concessional rate of tax @ 2%, he should issue C form to the seller based on his invoice in order to limit his tax liability in the State of origin. If the purchasing dealer is not providing C form as stated in CST Rule 12(1) specifying the particulars of bill or cash memo or challan such as date, Number and amount, there is every chance to reject the C form by the assessing authority of the seller. In such circumstances, the seller is liable to pay higher rate of tax, interest and penalty. It will create unnecessary litigation between the purchaser and seller. It is most important to note that seller is granting the concessional rate and he is liable to pay tax in the absence of proper C forms. In order to maintain better business relationship, the purchasing dealer is liable to issue the C form on the invoice date. It may kindly note that issue date of the C form is immaterial in this case.

Consignment against F-form under CST Act

Mayur Modi Director	We are Consigment Agent on the name of Modi Agrigenetics Pvt  Ltd Parbhani Dist Parbhani Maharashtra for Deccan Cements Ltd Hyderabad. We had given Advance payment to Deccan and purchased cement against F-Form.,now Sales Tax officer is not issuing us F-FORM reasoning F-FORM cannot be issued if payment is advance,We have paid complete maharashtra vat 12.5% on our consignment. Pls guide.

Posted 4 days ago

V.Devananda Narasimham  Advocate

Consignment agent is a dealer acting for and on behalf of his principle as per consignment agreement executed  among them along with terms and conditions stipulated therein including commission. If a consignment is moved from a principle as a consignment transfer, title of the goods with principle.On receipt of goods the agent  should prepare sale pattile(consignment accounts) and balance sale proceeds should tranfer to them along with F form for each month after deducting his commission. The F form value should be gross sales proceeds and not the transfer value. According to Sec.6A of the CST Act, 1956 if the transfer is not for the reason of a sale it is exempted from payment of tax or otherwise it is an interstate sale.  In this case you have stated that advance payment was made against consignment. If it is in accordance with the terms of the consignment agreement, it cannot be presumed as  consideration and balance sales proceeds shall be paid subsequently. It is the normal business practice that payment will be settiled after meeting all expenses relating to consignment stock transfer along with accounts and F form. Here it is not clear that whether advance payment is in accordance with the terms and conditions of the agreement. If full value of the consignemnt is paid and the principle has no title of the property, it is not a consignment stock tansfer but  it is an interstate sale. If so the contention of the Sales Tax Officer is in accorance with CST Act.

My contribution on lawyersclubindia.com

Introduction

In indirect state taxation, it is the liability of the registered dealer to collect and remit tax @ as provided in the tax statute. In Kerala (India), value added taxation was implemented from 01-04-2005. Under this, VAT system of taxation, a dealer is liable to pay tax on the value addition made by him if he had paid tax on his purchases within the State of Kerala i.e, tax payability=(output tax collected-input tax paid on purchases). So if you are not liable to pay tax, don't pay and never pay.