Central Sales Tax Act, 1956

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Presented By: BABASAB PATIL 3/29/12

Introduction

Central Sales Tax (CST) is a tax on sales of goods levied by the Central Government of India. CST is applicable only in the case of inter-state sales and not on sales made within the state or import/export of sales.

Inter-state sale is when a sale or purchase constitutes movement of goods from one state to another. Accordingly, consignments to agents or
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transfers of goods to branch or other offices is not

Conti

CST is payable in the state where the goods are sold and movement commences. The tax collected is retained by the state in which the tax is collected. CST is administered by Sales Tax authorities of each state. Thus, the State Government Sales Tax officer who assesses and collects local (state) sales tax also assesses and collects CST.

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Sales Tax is a tax, levied on the sale or purchase of

Central Sales Tax Concept

Tax on inter state sale of goods Tax collected by the State where movement of goods commences No tax on Stock transfer/ branch transfer In transit sales Sale in the course of imports Export sale

INTER-STATE SALE

An inter-state sale takes place when a sale or purchase:

Leads to movement of goods from one State to another State.

Is achieved by the transfer of documents of title while the goods are being moved from one State to another State.
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THE OBJECTIVES OF CST ACT

1.

Formulate place

principles

for

determining :-

when a sale or purchase of goods takes - in the course of interstate trade or commerce ; or - outside a State ; or - in the course of import into or export
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2. Provide for the :- levy of - collection and - distribution -Of taxes on sales of goods in the course of interstate trade or commerce. 3. Declare certain goods to be of special importance of inter state trade or commerce.

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4. Specify the restriction and conditions to which state laws imposing taxes on the sale or purchase of such goods of special importance shall be subject.

5. Provides for collection of tax in the event of liquidation of a company.

6. Authority to settle disputes in course of interstate trade or commerce.

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1.

THE CONDITIONS FOR CST ACT TO BECOME APPLICABLE the course of The sale should not take place in
import into or export from India. There should be a Dealer and such dealer must be registered under the CST Act. He should made a sale to any buyer ( registered dealer or unregistered dealer) He should carry on any business. He should made a sale of any goods ( declared or undeclared)

2.

3.

4.

5.

6.

The sale should be made in the course of interstate trade or commerce ( i.e. the sale 3/29/12

WHAT HAPPENS IF THE ABOVE CONDITION ARE SATISFIED

1.

The CST Act becomes applicable and CST is levied at the Rate specified. It is levied on Turnover, which in turn is computed on the basis of the sale price. It is payable by the dealer who makes the sale in the course of interstate trade or commerce. It is payable in respect of sale of goods effected by him during the year.

2.

3.

4.

5.

It is so payable to appropriate state in 3/29/12 which the dealer has a place of business.

Central Sales Tax Concept

RATE Of CST Sale to registered dealer for manufacture, resale or used Telecommunication network, Mining, electricity generation/ distribution 4% against Form - C Sale to Government 4% against Form D Others not covered by above Declared goods twice the rate applicable in the State 8% Others- higher of 10% or Sales Tax/ VAT applicable No CST if goods generally exempt from 3/29/12 VAT/ Sales tax.

RATE OF CST
1.

In an inter-state sale to a registered dealer against form C the rate of CST is 4% or local sales tax rate whichever is lower. If under the local sales tax law, sale or purchase is exempt from CST the CST is Nil. In an inter-state sale to government against form D the rate of CST is 4% or local sales tax rate whichever is lower. Rate of CST in case of inter-state sale of declared goods without form C or D is twice the rate of tax applicable to the local sale or purchase of such goods in that state. Rate of CST in case of other goods ( i.e. non-

2.

3.

4.

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5.

SALE PRICE
1.

Sale Price means the amount payable to a dealer as consideration fro the sale of any goods. It does not include, Cash Discount ( including Trade Discount, Quantity Discount, Additional Discount ). This sum is deducted from sale consideration.

2.

3.

4.

Cost of installation, freight and delivery is excluded ( if such cost is separately charged). 3/29/12

It includes,

Consideration for sale any goods Excise Duty ( whether included in sale price or separately charged) Sales Tax payable by the dealer ( whether included in sale price or separately charged) Sum charged for anything done by the dealer in respect of the goods at the time of or before the deliver 3/29/12 thereof.

Central Sales Tax Importance

CST never intended as a major revenue generating legislation but mere a regulative legislation

Today some States are reluctant to give up CST revenues whereas for some States CST is irrelevant As per the budget announcement CST is likely to be reduced to 3% from April 1,

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Basic aspects of CST, Inter state sales, stock transfer

data.docx

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Exemptions and Exclusions from CST

Sec 6(2) provides that no tax shall be payable in respect of subsequent sales during movement of goods. Sec 6(3) provides that no tax is livable on supplies to foreign diplomatic missions, UN, international organizations etc. Sec 8(1) provides for lower / nil sales tax rates when sales is to registered dealer/ government. Proviso to Sec 6(1) provides that no tax shall be payable when sales is penultimate to export as defined u/s 5(3). Sec 3/29/12 8(6) states that no tax is payable if sales is to

Exemption from CST by notification by Government

Sec 8(5) empowers state Government to grant partial or full exemption by issue of notification. Proviso to Sec 8(1) of CST Act empowers Central Government to reduce rate of CST.

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Source of Procedures under CST Act

Procedures are important for any taxation law. Often valuable tax concessions are lost or penalties are imposed only because prescribed procedures are not followed. Central Sales Tax Act is a peculiar Act- though the tax is leived as Central Sales Tax, it is administered by respective State Government. Procedures for CST Act are covered as follows:

Rules framed by Central Government Rules framed by State Government under CST Act Rules as prescribed in State Sales Tax Laws of each State.

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Some Provision of State Laws Applicable to CST

Sec 9(2) of CST Act provides that all provision of General Sales Tax Law of each State, except those provided in CST Act and rules in respect of the following shall also apply to persons liable under Central Sales Tax Act in that State:

Periodic Returns Assessment, Provisional assessment and reassessment

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Advance payment of taxes

Conti,

Registration of transferee and imposition of tax liability on transferee Recovery of tax from third parties Appeals, review, revision and references [except in case of appeals u/s 6A read with Sec 9] Refunds, rebate, penalties and interest Compounding of offences Treatment of documents dealer as confidential
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furnished

by

Offences

and

penalties(except

those

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Thank You

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