Sales Tax C, E & F Forms Demystified
CA Yogesh Sharma
1. INTRODUCTIONThere are certain type of forms which has been prescribed under central sales tax rules 1957, form C for making interstate purchase at lower rate, form F used to transfer goods from one branch to other in different state without making it as sale form E1 and E2 used when interstate sale or purchase which are effected by mere transfer of document of title (subsequent sale).
2. ANALYSIS
A) C FORM
It is issued by VAT department to the registered dealer who makes interstate purchases of those goods which are mentioned in his RC (registration certificate). While doing transaction purchasing dealer furnish this form to selling dealer in course of interstate purchase to get exemption/reduction in sales tax rate. It is defined under section 8(1) of CST act 1956.
*One C Form/One Quarter/Dealer
From above chart it is clear that firstly purchasing dealer will furnish form C to the selling dealer of Jharkhand to claim tax exemption or reduced rates of taxes (2%) thereafter selling dealer will submit these form to the department of VAT of Jharkhand.
One C form can be used for no of transactions for one quarter.
B) F FORM
With this, goods can be transferred/delivered from one state to another without recognising it as a sale. For instance the head branch may transfer goods/stock from one state to another to its branch or agent without becoming liable for CST.
It is issued by the VAT department on the request of the purchasing dealer (branch) the purchasing dealer submits F form to the selling dealer to claim exemption from making it as CST sale. As per section 6(A) of CST act F from is mandatory to prove transaction as stock transfer.
One F Form/One Month/Dealer
One F Form/One Month/DealerIs F form required in case goods are returned? The answer is yes, decided by the hon'ble Supreme court in case of AMBIKA STEELS that the liability of furnishing F form would be still there even if stock or goods are required to be sent back.
Registration certificate {RC} should contain the name and address of branches to which stock is transferred against F FORM {branch transfer} to claim concessional/nil rate of tax. One F form has to be issued for each month.
C) E1 AND E2 FORM
As per section 6(2) of CST act first interstate sale will be taxable, subsequent sale during movement of good by way of transfer of document is exempt from tax. For making subsequent sale exempt Form E1 & E2 are used.
- Ashok has to dispatch goods to Chandan Jaipur (Rajasthan) but Invoice done on Bhanu in Delhi
- A will receive C Form from Bhanu of Delhi and will issue declaration in E-I form to Bhanu
- Bhanu Sells Goods to C in Jaipur-Rajasthan
- Bhanu of Delhi will issue declaration in Form E-II to Chandan of Jaipur against which Chandan will furnish C form to Bhanu (Delhi).
- Chandan Ultimately receives the goods.
- Chandan will issue C Form to Bhanu and will receive E-II Form from him.
From above illustration it is clear that how goods/document of title move from one place to another. Actual delivery was received by C in Jaipur however between A, B there was only transfer of title. Only the first sale will be taxable, other subsequent sale will be exempt if dealers are registered.
In above example A of Mumbai will receive C form from B of Delhi & will issue declaration in E-I form to B of Delhi .Later on B of Delhi will issue declaration in Form E-II to C of Jaipur against which C will furnish C form to B (Delhi).
If above chain is broken then the exempt sale will get reversed and CST will be applied on these transaction.
Provisions of C form applicable to E1/E2 forms: Some provisions which are applicable to C forms are also applicable to E-I/E-II forms. For example one declaration for one quarter, indemnity bond if form is lost, issue of duplicate form, sales tax concession is not available if the forms are not submitted.
Latest case of Delhi High Court and Supreme court's verdict in A&G Projects and Technologies Ltd case: The Supreme court in A & G Projects and Technologies Ltd v. State of Karnataka [2209] 19 VST 239; [2009] 2 SCC 326 explained the scheme of section 6(2) of CST Act and held that once the first inter-state sale has suffered CST then subsequent sales effected by transfer of documents during transit will be exempt provided conditions prescribed u/s 6(2) are satisfied. This has been done to remove the cascading effect. The observation of the Supreme Court in the said case is provided as below
"Analysing Section 6(2), it is clear that sub-section (2) has been introduced in Section 6 in order to avoid cascading effect of multiple taxation. A subsequent sale falling under sub-section (2), which satisfies the conditions mentioned in the proviso thereto, is exempt from tax as the first sale has been subjected to tax under sub-section (1) of Section 6 of the CST ACT 1956. Thus, in order to attract Section 6(2), it is essential that the concerned sale must be a subsequent inter-State sale affected by transfer of documents of title to the goods during the movement of the goods from one State to another and it must be preceded by a prior inter-State sale. It is only then that Section 6(2) may be attracted in order to make such subsequent sale exempt from levy of sales tax. However, the proviso to sub-section (2) of Section 6 prescribes further conditions and it is only on fulfilment of those conditions that the subsequent sale stands exempted. If those conditions are not satisfied then, notwithstanding the fact that the sale is a subsequent sale, the exemption would not be admissible to such subsequent sales. This is the scheme of Section 6 of the CST ACT 1956."
In a recent case namely Mitsubishi Corp. Ind. Ltd. Vs Value Added Tax officer decided by Delhi High court wherein sighting the above observation of the Supreme court it was argued by the counsel for the state that if the first Inter State sales is an exempted sale then the subsequent sales should not get the benefit of Section 6(2) of CST Act even if all the conditions u/s 6(2) are satisfied since the first sales had not suffered tax. The Delhi High Court in this regard observed as under:
"A reading of the said portion of the Supreme Court decision only indicates that where the first sale is taxed, the second sale would be exempted because of the object of avoiding the cascading effect. However, the Supreme Court decision cannot be understood to mean that where the first sale is exempted, the second sale must be taxed even though the conditions under Section 6(2) for exemption stand satisfied."
Thus even if the first sales was exempted due to exemption on tax available in the state where from the first sale is made the subsequent sales in other state will be exempted if the conditions u/s 6(2) of CST Act are satisfied.
Salmaan Khan delivers a career guidance lesson from his movie 'Kick'
Main Dil Mein Aata Hoon, Samajh Mein Nahin..Salmaan Khan delivers a career guidance lesson from his movie 'Kick'
In his recent movie 'Kick', Salmaan Khan ends the movie with the dialogue – "Main Dil Mein Aata Hoon… Samajh mein nahin". Salmaan always has that penchant for delivering whacky dialogues which truly symbolizes his witty character. Though, the dialogue may not have any particular significance in the movie, but it delivers a fantastic lesson, a lesson that is so very crucial to take any decision in life.
A few days back CA Final results were announced and I met various students who cleared their papers and are over with the most difficult part of the CA journey, giving exam papers. I could see a sense of satisfaction and an attitude of confidence in their eyes, after clearing what could be one of the most difficult exams in the world. This day reminded me of my past and took me some 12 years back when I also felt similar, with stars twinkling in my eyes and a feeling of 'I have done it' echoed my mind again and again. But believe me or not, that excitement starts to fade away after some time and you start grappling with the question, "what next". The same feeling crossed my mind as well as I started to wonder, what should I do now?
If you decide to take up a job, I have seen students take up any job for the sake of taking it. I have met very few youngsters who would have complete clarity on the type of job they want to pursue. Majority pick up whatever comes in their way since earning money is their main priority. What they fail to realize and perhaps, it later becomes a matter of serious concern is whether the job is close to their heart or not. More often than not, the job was not the one that gives them complete satisfaction or Kick, but by the time that realization sinks in, it's too late.
Even I grappled with a similar question when I started my career. The first question was whether I should take up a job or should I pursue entrepreneurship. Entrepreneurship is something which is a dream of almost everyone, not because it is cool to be an entrepreneur, but simply because it offers you a platform to express you talents and your true self. Though the keeda to enter entrepreneurship was very much live within me, I still decided to tread the orthodox path of taking up a job. However, that entrepreneur keeda eventually reached a peak when after 9 years of qualification I left my Rs. 3million salary job and turned an entrepreneur.
It was almost 12 years back when I got a call from a BIG4 for my first interview after qualifying as a CA. The vacancies were in their tax division. During my articleship I got the opportunity to work in indirect taxes and that field fascinated me. After spending 6 months doing VAT and Service tax, I decided indirect tax is going to be my area of specialization. That feeling was purely because of the Kick indirect tax gave me, though I also did bits and pieces of direct tax and loads of audit. But none could match up the adrenaline that indirect tax rushed into me and consequently, I decided to pursue it as my career.
In the interview I was told there are vacancies in direct tax as well indirect tax but I told them very clearly of my interest in indirect tax, and my interest to give interview only for indirect tax. Remember, I was 24 years old young, newly qualified CA looking for a job and at that moment you would agree anyone would have just grabbed that job, whether it is direct tax or indirect tax or audit. BIG4 at that time (12 years ago) did give anyone and everyone a kick. However, I listened to my heart and I knew I would do well if I pick up indirect tax, and that's exactly what I did. I got selected in the best BIG4 that helped me shape a great career later. Even if I had refused a direct tax job to them, I would have definitely got indirect tax job with some other organization.
Dil ki suno ya dimag ki.. is the key to the whole discussion. The mind always inspires you to take logical decisions, pick up jobs that are more valuable, offer more money and respect and do stuff which is a norm in the society. Things originating out of mind are very reasonable and therefore, risk free.
However, if you start to listen to your heart, your true self, your inner being, you would realize that those things are illogical, completely out of the norm and therefore, highly unreasonable. But beneath unreasonableness lies the real power, the power to do something different, the power to achieve what you really want to achieve and the power to be truly yourself.
Before I end this article, I want to offer you some practical tips which will help you identify whether you should take up a job or start your own consulting firm or do something else which makes you feel happy. I want you to write them down because writing your goals and action steps make it much easier for you to achieve them. Writing gives you clarity and "Clarity always precedes Mastery".
Since this article has become too long, please visit my blog www.nimishgoel.com for a detailed practical guide on how you can decide whether to start your own consulting firm or get into a job.
I hope these tips are of help to you and I have been of service to you. I wish you the very best in your career and may God bless you with power to be your self and accomplish the objective for which you have born into this world.
I would like to finish off by a quote from the great "George Bernard Shaw":
"A reasonable man adapts himself to the world. An unreasonable man persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man"
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Authored by Nimish Goel, a qualified chartered accountant who's passion is to coach young chartered accountants and aspiring chartered accountancy students achieve the best in their life. Nimish used to work with Ernst & Young and PwC in India and has also worked in Europe. He now runs his own consulting company and runs a blog www.nimishgoel.com. He can be reached for any queries and issues on his blog.
Higher fair market value estimated by DVO isn't sufficient to confirm additions under Section 69B
IT : Where assessee had offered a reasonable and plausible justification regarding actual consideration of sale/ purchase transactions relating to property in question and revenue had failed to discharge its burden to prove, addition made by revenue under section 69B to be deleted
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