• Dec
  • 12
  • 2009

Sales in transit meaning, procedure, case Laws & Provisions

Posted In GST | 94 Comments »

Q.1 Please explain the scheme of “in transit sale” covered by section 6(2) of CST Act, 1956?

Ans.: Section 3(a) of CST Act,1956 defines the interstate sale/purchase transaction. Section 3(b) defines the interstate sale effected by transfer of documents of title to goods. When the goods are in movement from one State to other. The whole section 3 reads as under:

“3. When is a sale or purchase of goods said to take place in the course of inter-state trade or commerce — A sale or, purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase —

  1. occasion the movement of goods from one State to another; or

  2. is effected by a transfer of documents of title to the goods during their movement from one State to another…”

Section 6(2) of CST Act gives exemption to subsequent interstate sale effected by transfer of documents of title to goods when the goods are in movement from one state to another. However such exemption to subsequent inter-state sale is subject to production of Form E-I, as obtained from prior vendor and ‘C’ form from buyer.

A simple example can be that, suppose A of Mumbai has sold goods to B of Ahmedabad. The goods are dispatched by lorry and L.R. is taken out by A (Mumbai) where in A is consignor and B (Ahmedabad) is consignee. If before taking delivery from transporter, B decides to sell his goods to ‘C’ of M.P., he can simply endorse the L.R. in name of ‘C’ and the sale will be complete. This is the second or subsequent interstate sale in the course of same movement. In this case A must have charged 4% CST in his bill. Being a second interstate sale effected by B to C, B is equally liable to pay CST on above transaction. However the intention of Government is not to levy multiple taxes on sale taking place in one course of movement. Therefore the subsequent sale is given exemption. However it is subject to production of given forms. In above example, the sale by B to C will be exempt if B produces before his assessing authority Form EI issued by A of Mumbai and Form ‘C’ issued by C of M. P.

In light of above it is clear that the sale effected by transfer of documents of title to goods is eligible for exemption u/s. 6(2). These exempted sales are also referred to as “Sale in transit”.

Q.2 What is the procedure for transfer of documents of title to goods and the relevant judgments therefore. Whether pre- determined sales are covered by above category of “in transit sale”?

Ans.: The ‘sale by transfer of documents of title to goods’ has been interpreted by judiciary in many cases, some of them are cited subsequently for reference.

Normally the sale is effected by endorsement of transport documents. On the backside of the document like, L.R. the vendor can put his signature and transfer the documents to buyer. As held by Bombay High Court in case of Chhaganlal Savchand (62 ITR 133) the transfer of documents can be effected even by delivery.

It is also held by judiciary that transfer of documents can take place even by instruction. Therefore it is not necessary that the sale by transfer of documents takes place when the document is first taken out between first seller and his buyer and then transferred by the buyer to his buyer. The buyer of first seller can give instruction to dispatch the goods directly to his customer. If such instructions are given and accordingly the goods are dispatched to third party (i.e., buyer’s buyer) it is because of transfer effected by the buyer of first seller. The transfer takes place while booking the goods in transport and this is also a transfer during course of movement. This is known as notional or constructive transfer. Since this transfer is taking place during course of movement from one State to other it is eligible for exemption u/s. 6(2). In such case the first seller is consignor and the buyer’s buyer is consignee. However the commercial bills will be by first seller to his buyer and then by the first buyer to his buyer. In such a case to enable the first buyer to claim exemption, E-I form is to be issued by first seller to such first buyer.

It will be appreciated that even if the sale is predetermined by your buyer to his buyer it does not make any difference. On the contrary it makes the case strong in the sense that there is real transfer of documents at the loading station itself and any possibility of make believe transfer gets avoided. Therefore predetermined sale cannot be an issue. The same will be clear from the judgment given below.

The above legal position is clear, amongst others, from following judgments.

M/s. State of Gujarat vs. Haridas Mulji Thakker (84 STC 317)(Guj):- In this case the facts are that the Gujarat dealer received order from another dealer in Gujarat. For supplying the said goods, the vendor dealer in Gujarat placed order on Maharashtra dealer and instructed to send the goods directly to the Gujarat purchasing party. Gujarat High Court held that the sale by Maharashtra dealer to Gujarat vendor dealer is first interstate sale and the one by Gujarat vendor dealer to Gujarat purchasing dealer is second interstate sale. Gujarat High Court also held that the second interstate sale is exempt u/s. 6(2) being effected by transfer of documents of title to goods. In this case though there was no physical transfer of L.R. etc. Gujarat High Court held that there is constructive transfer by instruction and hence duly covered by section 6(2). This judgment duly covers both issues, that there is no need for physical transfer and also that having predetermined parties does not affect the claim.

M/s. Fatechand Chaturbhujdas vs. State of Maharashtra (S.A.894 of 1990 dated.12-8-1991) decided by Maharashtra Sales Tax Tribunal :- In this case the local party purchased goods from other local party and directed the same to be despatched to outside State party. Even though local party was shown as consignor, taking the view that while placing order there is term for outside place dispatches, Maharashtra Sales Tax Tribunal held that the sale between two local parties is first interstate sale and the sale by local party to outside party is subsequent interstate sale, duly exempt u/s. 6(2).

In short even if there is predetermined sale, there is no adverse effect on the sale to be claimed u/s. 6(2). On the other hand, in light of above judgments, the claim gets more authentic. The transfer of property to ultimate purchaser (consignee) gets synchronized at the time of booking the goods with the carrier and hence the subsequent sales take place by transfer of documents of title to goods as held by High Court in above case of 84 STC 317. The claim of exemption is to be allowed under above circumstances subject to production of required forms.

M/s. Duvent Fans P. Ltd. vs. State of Tamil Nadu (113 STC 431)(Mad.) :- Local dealer purchased goods from other local dealer and directed to send them to his purchaser’s place in other State. Madras High Court held that the first transaction is first interstate sale and the second sale is also subsequent interstate sale exempt u/s.6(2) of CST Act. The above judgment is directly on issue and hence will govern the field.

In fact there are many judgments on this issue. However since the legal position about transfer of documents as well as predetermined sale is clear from above judgments, no further citations are given here for sake of brevity.

Thus the “sale in transit” can be effected by any of above modes.

Authored by: C. B. Thakar, Advocate


94 Responses to “Sales in transit meaning, procedure, case Laws & Provisions”

  1. Manish Jain says:

    Dear Sir,

    We are registered dealer in Mumbai,

    We have imported the goods from china to vissakapatnam port(A.P),

    1. we have order for supply same imported goods to Ranchi (Jharkhand)
    2. We directly want to dispatch the goods from Vizakport to Ranchi to save transportation cost,

    how can we make the billing and dispatches,

    Kindly Advice,

    Regards

  2. Bhavin says:

    We are a dealer in Ahmedabad. We are buying goods from our manufacturer in Coimbatore which are despatched mostly on RR sale basis & we get only the LR copy. For 1 case our customer in Ahmedabad has to export these goods. The goods are being despatched from our manufacturer to the end customer on RR sale basis (Order is in our name & invoice will be ours) . Pls advise whether End customer has to issue H form directly in the manufacturers name for CST to be nil or else customer issues H form in our favour & we issue H form to the manufacturer. If it is done by 1st case ie End customer issues H form in favour of Manufacturer than what will be the effect on our Sales Tax.

  3. gulshan kumar says:

    a delear is registered in vat in new delhi import from china goods delevired at chenni port and as it is export to england from chenni port ? it is export or tranist sales required any forms or documents pl. confirm.

  4. Kirti says:

    My consignee has not yet received CST, but I’ve dispatched the material from Maharashtra to West Bengal.
    What can be done if no CST is received by the time material reaches WB border.
    Pls suggest a way out.

  5. Lavnish Jain says:

    Sir A of punjab is purchasing goods from B manufacturer in Karnatka against 2% cst form c. Goods are to be sold to C of Tamilnadu Chennai.
    Kindly guide me the procedure. E1 FORM has to be obtained prior to dispatch? Will E1 form be required at karnatka border? Invoice made by A to C will have to show any tax in invoice? What will happen to the profit of A? Will it not attract any tax? Will C come to know about the goods being purchased from B and vice versa? When to hand over invoice of A to the transporter? Csn Endorsed LR be kept only upto karnatka border and once goods reach Tamilnadu transporter can attach fresh LR with no mention of karnatka so that secrecy of buyer seller can be maintained? Please reply as I am anticipating transaction on 2nd June, 2014. Regards.

  6. Bhupendra Shah says:

    Dear Sir,

    There is a dealer in Karnataka Namely “A” buying the goods from Gujarat manufacturer Namely ‘B” and would like to supply within Gujarat to a buyer Namely “C’. How the document has to make. Does it attract VAT. And if yes can “C” take a credit of VAT. Please also let me know how the “B” has to prepare his Invoice.

    Thanks and regards,
    Bhupendra Shah

  7. Neeta says:

    Dealer register in state of Maharashtra, it purchase goods from dealer in Gujarat & sale it in maharashtra through sale in transit & dealer in gujrat directly deliver goods to buyer. thereafter we perform erection on buyer’s place. will it liable to tax?

  8. Anil Kumar jain says:

    Dear Sir, We are trading in Electrical Items ,& sales to construction co in trasit sale by way of direct delivery from manufacturer to constuction co and billing from manufacture buyer is our name & consignee is construction co and GR/ Bilty is inthe name of construction co. We taken C form from construction co & again we issue “c” form to mfr.& receive E1 form from Mfr. Please advice that this transaction is wrong or right as per 6 (2) of CST act.1956. If it is wrong how we can do it as per law.

  9. naresh talan says:

    Dear sir i am a trader belongt to Haryana i will buy goods in Gujarat and goods will consume in utter pradesh . utar pardesh give me c form and excise duty only. uttar pradesh wants to excise modwat . but i have no excise registration.. i want uttar pardesh use gujrat excise registration. pl tell me which paper document will i need in this transit sale in 3 state.

  10. Kamal says:

    Dear Sir,

    We have purchased towels from Trident mills against H form as in their state towels are taxable and charged 6.05% and in mumbai we have sold to other party in sales against H form as towels have no tax in maharashtra. Please reply how can we give H form to Trident mills as we are selling locally to our party as third party will give H form to us in our name

  11. Brij Mohan says:

    We have a contract of UHVBN on turnkey basis we purhcase itra-state and supply sale in transit to UHBVN kindly consult it is legale.

  12. Kishorbhai says:

    I am a delear of electrical goods, i have no excise registration, my customer
    required excise gatepass, than our manufacture company send material in customer
    name is our name and consignee name our party’s name. they have send material to
    sale in 2% CST & i am also sale in 2% CST, it is Sales In transit transection.
    please give advise.

    thanks

  13. H.N. Gupta says:

    Dear Sir/ Madam,

    My company is a Manufacturing company exisable unit registered in Ghaziabad, i have a supplier in chennai and my client is also in chennai.
    sir,
    we want to to reduce transport cost, so willing to send that material, direct from my supplier to my client, is it possible? if yes, then how the invoicing and FORM work will be done? and what will be about taxes and duties?

    Please suggest the best as earliest.

    thanks

    H.N. Gupta

  14. Kushal says:

    Sir, Can you guide me for the following transaction – Manufacturer A ( In excise ) based in Haryana sells goods to trader B ( regd. under Excise in MUMBAi ) Trader B sells the goods in transit to end user manufacturer C in punjab. Now , the goods in transit cannot be directly diverted to punjab untill and unless they arrive in maharashtra and then they have to be re-booked through another transport to Punjab. Also, C in punjab should get Cenvat credit from Original Manufacturer A.

  15. Nikhil athreya says:

    I am based in karnataka and have received an order from my client (based in ap) for supply of materialswhich I will get from raipur. My vlient wants the materials for his work site in karnataka. So can I bill him sale in transit though the material is goinv to be unloaded in karnataka?

  16. srinivas says:

    I Import the goods from china and i received goods chennai port I have an order from karnataka state dealer is the same day my plan is that I have avoid the transport charges so that how shall I follow the transaction procedure and how to raise the require document to delivery at karanata state dealer

  17. sahane s.d says:

    Dear Sir,
    My one client from Delhi had purchased some goods from us against C from. Still we are waiting for C forms from last two to three years. Is it possible to claim fir against non receipt of C form.
    regards

  18. sachin says:

    Dear Sir,

    we are having company register office in Delhi and Sales Tax registration in Haryana. Please advice can I take vat input on local purchase from delhi.

    Please advice

    Sachin Kumar Suri

  19. Anand Swami says:

    sir
    pl conform in sale in transit we can
    mention cst amount in bill or total amount

    Regards
    Anand

  20. vikas gupta says:

    does the exmption of no cst will available in following case -

    A purchase goods from Interstate and also receives E-1. He sells that goods to a local dealer without any tax as E-1 sales.

    Is it correct

  21. pavan says:

    the Quary
    X & Y are in the state of Andhra Pradesh. X Placed order on Y and the delivery instructions given to delivery the goods to Z who is in karnataka.

    As per my knowledge the CST is applicable and i request for clarifications regarding the above.

  22. Nikhil says:

    does the exmption of no cst will available in following case -

    A purchase goods from Interstate and also receives E-1. He sells that goods to a local dealer without any tax as E-1 sales.

    Is it correct?

  23. Deepak Dhyani says:

    Dear Sir,
    pls solve my question that if A is a manufacturing company registered in delhi & has its branch at Uttaranchal with registration which is a subsidy zone & all items are exempted which are manfacturing in delhi.Can A company supply/sale these products on Uttaranchal bill/invoice as sale in transit diractly from delhi & avail exemption ,& which form should require with these exempted goods to sale to other states

  24. Mohandas says:

    Our firm registration at Tamil Nadu, we got metal scrap supply in MP, same time we also purchase and sale same state, how can i make bill our firm name, please guide me briefly.

    Thanks Regards

    Mohandas.

  25. Mohandas says:

    Our firm registration at Tamil Nadu , we got metal scrap supply order from Delhi same time am purchase the goods Delhi only and also supply Delhi, purchase and selling same state, How can I made bill our firm Name. please guide me.

    Tanks Regards

    Mohandas.

  26. Vipul Patel says:

    I am a dealer from Mumbai, I have received order from XYZ co in Gujrat and I am purchasing the said material from one vendor in Gujrat.
    My questions are as below -
    1) what is applicable ? CST or VAT from my supplier
    2) Which tax I should charge in my invoice to my customer in Gujrat – VAT / CST? and at what rate??

    Please Reply

  27. Vinal J Shah says:

    Hi
    I wanted to ask that in transit sale if i am the consignee than i have to issue my bill to next party in 7 days from my purchase bill date

  28. Deepak Dhyani says:

    Dear sir,
    we want to supply exempted goods from U.P to Delhi & other states,which form is require for supply these goods to our delhi branch & sell for other states.we buy taxable raw material from delhi so for these which form is require
    please guide me to know these forms for stock transfer of both taxable or exempted goods & for sale
    Thanks
    Regards
    Deepak Dhyani

  29. JAGMOHAN SINGH says:

    DEAR SIR,

    WE HAVE DISPATCHED THE MATERIAL FROM LUDHIANA TO GHAZIABAD (UP)ON 16/01/2013
    BUT OUR BILL NO.002 DT.31/12/2012.AND OUR TRCUK HOLD AT SHAMBOO EXPORT BARRIER
    DUE TO OLD DTD.BILL.WE HAVE NO KNOWLEDGE ABOUT THIS.PLEASE ADVICE ?.
    ALSO CONFIRM WHAT IS THE LIMITED PERIOD AFTER INVOICED THE MATERIAL ?.

  30. GIRISH says:

    Sir,

    We have Purchased some Bearings from Punjab and we are sending the same goods to Hyderabad,for repair Works what is Procedure?

  31. Manoj says:

    we are an EOU in Rajasthan, we want to purchase material Agaisnt C form with E-1 transaction.

    can we claim CST refund on these purchases.

    rgd
    Manoj

  32. Sunil Tripathi says:

    Hello sir ,

    company abc is purchasing goods from maharashtra

    Bill to party : abc , maharashtra

    consignee party : xyz , indore (mp)

    how the transaction takes place . Do ‘abc’ need to charge 2% cst again to ‘xyz’
    How to get the relief from double taxation if applicable .

  33. mahant says:

    sir,

    We have registered delear in Maharashtra (A). We have purchase goods from Delhi(Consigner) and sale same goods to our customer registered with maharashtra(B)(Consignee) without taking delivery by A raise Invoice to B against “c” form and required form E1 from B.

    pl suggest this E1 transaction is correct. if not correct pl suggest.

    Thanks
    Mahant

  34. kunju says:

    ‘A’ (kerala) purchased from ‘B’ manufacturer (kerala) and sell to ‘C’ mumbai for exporting. Goods goes directly to ‘C’ from ‘B’. What all documents needed to avoid tax in invoice? Transportation documents?
    Please reply in detail

  35. ranjeeta says:

    If the billing is within the mumbai online services is taken
    for oms than cst is applicable or vat? please advise.

  36. RAJ says:

    Dear Sir

    Company “A”(Govt Organisation ) gives order to Company “B” in the state of haryana with clear instruction to supply the material in sale in Transit basis. Company “B” registered with HVAT orders for material to company “C” in Rajasthan and have issued Road Permits of there own. The materials are supplied by Company “C” on issuance of C form and road permits from company “B” . The company “B” has taken E1 from Comapny “C” and on production of the same to Employer as company “A” requisite form C was issued to Company “B”. The material as supplied by company “C” were delivered by company “B” to company “A”

    Kindly advvice whether the sale as made should be considered as Sale in Transit oor not.

  37. vaidehi says:

    Hi,

    I am a dealer from Mumbai, I have received order from XYZ co in Gujrat and I am purchasing the said material from one vendor in Gujrat.
    My questions are as below -
    1) what is applicable ? CST or VAT from my supplier
    2) Which tax I should charge in my invoice to my customer in Gujrat – VAT / CST? and at what rate??

    Pls revert.

    Thanks

  38. service tax applicable on E-1 sale says:

    please advice

  39. Rakesh Shah says:

    Sir, I am a trader in Mumbai. I got orders from Gujarat, we Place a order to Gujarat Dealer,
    gujarat deler place order to Hubli ( karnatak ). Now as per instruction Hubli Mfg. book the
    material directly to our End user at Gujarat. So please inform shell we sale the material under 6(2) without charging CST If all the forms E1 -E2 & C- form exchanged by us. A -trader in Mumbai. B – Trader in Gujarat. C – Mfg. In Karnatk. D – End user in Gujarat

    As per oredr of A to B – C delivered Material Directly “D’ in Gujarat. In above case C-raised excise invice with 2% CST to B. B issue invoice to A with out charging CST & A issue invoice to D with out 2% CST. pl. inform this transaction is correct.

  40. Farooque Warsi says:

    Is it possible to have a E1 transaction if the final customer is 100% EOU unit and avails of CT3 BENEFIT. 
    i.e I rasie a invoice with billing address as my distributor and shipping address as the customer with zero excise (ct3 supply) my distributor endorses the LR and material gets deliverd to the customer and the customer gives ARE-1 TO US.

  41. vikas saini says:

    sir, 

    pls. advice that 

    if we have do claim in cenvat credit rules 5 /2004.   what is the time limit  means  when will be summited the refund claim  to central excise .  pls. inform to us asap. 9782130930

  42. Krishnamoorthy says:

    Question: We are Product ordered by Uttaranchal based Customer , But delivery at Chennai — what is the procedure to be followed.

    Rgds,
    A KRishnamoorthy
    9443273168

  43. Ashish Jha says:

    hi. I need an urgent help with supporting facts.

    If a company is registered in delhi for sales tax. It has purchased a material in gujurat (the company is not registered for sales tax in Gujarat) & with out bringing back to Delhi, it has directly sold it to some customer in Gujarat.  While purchasing the material we have payed FULL tax i.e CST @ 5%. How can we bill this to the customer to whom it has been soldin Gujarat. i.e my question is while we make a tax invoice(sale bill) what amount of CST we have to mention & is this bill Full tax paid & we don’t have to pay any further tax & how will it be used while filing the sales tax return????

    Please reply urgently

  44. Rahul srivastava says:

    What is form ‘C’ and why it is required. If i am newly establed not registered so from where i can obtained this form”c”. is it mandatary for me as newly establishment .

  45. KRISHNA GOPAL says:

    DEAR SIR,

    IF I PURCHASE MATERIAL FROM KASHIPUR TO DELHI ON FORM “C” AND THEN ENDORSE THE LR IN FAVOUR OF MY PARTY IN DELHI AGAINST FORM “C”, WILL IT QUALIFY AS E1 SALE.

  46. amit says:

    sir , i am confused about sale in transist. would you pls. help me out i solving my problem.

    i am a trader from punjab , i have to purchase metarial from delhi , kolkatta or from mumbai & have to send the metarial to u.p & m.p . on my place there is no transport directly coming from mumbai or from kolkatta – that’s why i prefer to recieve my metarial in delhi. saves my lot of time & harrasment. i dispatch the metarial directly from delhi to u.p or m.p on my invoice of punjab state — goods physically are not entering or leaving punjab,but from delhi direcly going to their destinations. coz from delhi u.p is really close . if i take the goods which i have to send ( to u.p or m.p ) to punjab it will consume 3-4 days + expence , as soon as i will recieve the goods again i have to dispatch it to m.p or u.p , just to reach delhi again it will consume other week or so. then physically i have to go the Trsnaport office to exchange the goods from one transport to other. & so on ……

    So THIS IS MY PROBLEM that can i sell the goods like this or no…..RESPOND PLS,……….IS IT SALE IN TRANSIST

  47. Debiprosad Mukherjee says:

    In case of “sale in transit” is there any time limit to submit the invoice of first buyer to the buyer’s buyer?

  48. Sandeep says:

    Hi,

    I am a dealer from Mumbai, I have received order from XYZ co in Chennai ( the PO is released from Mumbai office) for supplying material to locations in TN and AP, Also note that I am purchasing the said material from one vendor at Chennai ( for TN locations) and AP ( for AP locations). My questions is as below.
    1) what is applicable ? CST or VAT from my supplier
    2) I have to bill to client in Chennai from Mumbai, which tax is applicable CST or VAT ?

    Pls revert.

    Thanks Sandeep

  49. RAVINDER AGGARWAL says:

    we purchase material from a unit of SEZ with BOE. Bill & G.R. in our name. Can we endorse G.R. in transit. if yes what is the status of Excise & CST

  50. vineet kumar says:

    dear sir 
    i have a problem please solve it ,there is condition applied that 
    A -final purchaser/from orisssa
    B-of delhi /trader
    C-of up is manufacturer
    D-of orissa is also a mfg

    A gives order to B for purchase, Now B give that order to C for Manufacturing,Then C give it to D to Buy the product  and finally D send the product to A ,D raised it invoice with excise and cst,
    Now A give the commercial invoice by raising cst on the cost+profit to B,then B is not able to solve the problem there fore give the suggestion 
    thank you 

  51. csk says:

    sir,

    i am registered in maharashtra and have received purchase order from delhi stating that the materials shuld be sent within maharashtra. in that case, what i should charge as sales tax – i.e., whether cst 2% or 12.50% vat. kindly reply please

  52. S K GOEL says:

    somebody please URGENTLY provide precise answer to following querry by : -
    PRABHAKAR KULKARNI wrote on 23 December, 2010, 13:05

    We are Private Limited Co. having its registered in Mumbai (registered under CST & VAT do not have any manufacturing activity) got an order from Delhi party for supply of Incinerator material and Furnace Vessel to be supplied in Punjab to the end user. (The Co. which has issued P.O. to us is not end user)

    Purchase Order terms are PO Value + all taxes and duties within India shall be to the buyer’s account (i.e. reimbursable).

    We got the Vessel manufactured from Gujarat and sold (Sale in Transit). The seller has billed us Assessable value + ED + CST + Transportation.

    The Incinerator material was procured from the party in Delhi (who had purchased the same from the manufacturer In south) and directly supplied to Punjab. This was also sale in transit to us and to end-user.

    Our Purchase orders on both the above supplies were PO Value + all taxes and duties reimbursable. For incinerator material since the transaction was sale in Transit the party raised Debit Note for ED & CST on us; based on the actual invoices of manufacturer.

    For both the supplies the end user got the ED & CST Invoices (for availing Cenvat).

    Now as per P.O. we have raised our commercial invoices and Debit Note for the reimbursement of ED & CST (for sale in transit invoices as well as for manufacturer’s invoice i.e. Vessel)

    We shall be grateful if you could educate us on whether we are right in raising the Debit Note for reimbursement of ED & CST against our supplier’s invoices (as we have already received Debit Notes from the supplier of Incinerator material).

    what will be the status under VAT for party getting reimbursement and  treatment of the same in accounting books

  53. MALA says:

    Sir,
    We are trader located at Hosur.Our suppler at chennai.we want to purchase goods from chennai and to sell at Salem,then please tell me the procedure for selling the goods from chennai without delivery of hosur and directly to the concern party within the state.

  54. MALA says:

    Sir,
    We are trader located at Hosur.Our suppler at chennai.we want to purchase goods from chennai and to sell at Salem,then please tell me the procedure for selling the goods from chennai without delivery of hosur and directly to the concern party within the state.

  55. CA. Puneet Goyal says:

    It is very useful and understandable……Thanks Sir

  56. Anurag says:

    Sir, we are trader/ dealer ‘D’ in delhi having our excise registration in delhi only.
    We have supplier ‘X’ ( manufacturer) in maharashtra and end buyer ‘Y’ ( Y is also a manufacturer ) in maharashtra too.

    Supplier’s invoice – Bill to party is D, consignee is Y ( sales within the state, VAT applicable).
    The material reaches directly to Y and we make the payment to X as per the invoice raised on us.

    Please how can we create a commercial invoice from delhi on Y ( adding our margin also ). what will be the contents of our commercial invoice ( we paid VAT, how to go ahead in this case). 

    Thanks
    Anurag

  57. Chanddrashekhar Kapse says:

    Sir,

    we are based at Mumbai having our manufacturing contracters at Chennai,Pondicherry.
    if we buy raw materials at Banglore under sale in transit and directly send it
    our above Chennai or Pondicerry factory under sale in transit please let me know whether we will cover under section 6(2) for availaing exemption. Please let me have your reply urgently. Please let me have your explanation for the following judgement urgently.

    thanks

    Judgement Last Updated on: 11 Dec 2008 LexDoc Id: 352238
    Category – SC Cases, Sales Tax, Indirect Tax
    Issuing Authority/Forum: SC
    A and G Projects and Technologies Ltd. vs State of Karnataka
    Citation (2009) 19 VST 239
    LexReported

  58. deepak Singh says:

    We are the manufacturer of Pastic battery casings situated in Uttarakhand, we have an input material that was being used for manufacturing, but some of the quantity has been perished and can not be used for production, can we sold it to any party with 2% CST agains form “C”.

  59. Kalpesh says:

    We are pune based company. Please help us in following issue.

    Buyer has ordered turnkey project to us. We inturn ordered equipments to various supppliers. Now buyer is in Andhra Pradesh. ( Online way bills required for movement of goods ) if transaction is done on sale in transit i.e. supply of equipments directly to end user by endorsing LR by us & dealer in what name we should request end user to issue way bills. Please help whether it will be OEM, Dealer or us )

  60. Milan says:

    Dear Sir / Madam,

    We need a relevant case for the below mentioned transaction :

    Company A sells (commodity X) to company B
    Company B sells (commodity X) to Company C
    Company C sells (commodity X) to Company A again

    In the given transaction following are critical observations of sales tax department :

    a) no physical movements of goods
    b) No transport challan are prepared
    c) No delivery instructions issued

    However the transactions are being done through registered dealers only through cheque.

    Under the given circumstances can the sales tax department imply that the above transactions is “ILLEGAL”?

    If you have any relevant case laws kindly do let us know and I am ready to make requisite service charges, as applicable!

    Regards,

    Milan Parkeria

  61. ASHOK says:

    trader can do e1 sale in sez?

  62. R G Shankar says:

    Dear Sandeep /Ms.Sudha,

    Even though the Order is placed on TN, The materials is supplied from A.P to your place in AP.
    As this is an intra-state transactions, local VAT will be applicable as per A.P. VAT schedule.

    regards

  63. Sandeep says:

    Dear Sudha,

    We are also based @ HYD , and has got the same issue,, if you have found the solution , please share.

    Thanks

    Sandeep

  64. Sudha says:

    Can you please let us know how to bill, if a company from Tamil Nadu orders on a company in Andhra Pradesh and wants to deliver the mateiral in Andhra Pradesh. CST or VAT.

  65. Nishad says:

    Dear Shashi Bhushan,

    Location of is irrelevant.Since your factory located at UP and same is registered under CST Act 1956 with UP Govt. , you can transfer the goods to customer in Gujarat Sate. Such Sale is permitted against form “C” for concessional rate of 2%.

    With Regards,

    Nishad

  66. Shashi Bhushan Chauhan says:

    Dear Sir,
    We are having Office in Baroda Gujarat and our principle company located at Sahibabad UP.

    We want to sell the product to the our Gujarat Customer based on Sales in Transist. The naterial directly despatch from sahibaadbad to customer who based at gujarat. Can we do this transaction uder C form, Please advice with Law.

  67. RAVI says:

    Can you clarify on Inter state Sale which is as follows:

    Order placed by (A) situated in Andhra Pradesh on (B) located at Tamil Nadu.
    Now, (A) wants the delivery to be made to (C) who is located at other state and do not have the CST Registration wherein (A) is having registration. (A) and (C) are same Organization.

    This Inter state transaction is with FULL RATE of TAX and not on concessional say form “C” or so.

    Whether this transaction is legally permissible?.

    (B) indicates that it is not possible.

    Thanks and regards,

  68. Amit says:

    can we issue C form if assesses complete transaction before taking registration under CST and when transaction took place production of the assesses has not been started.

  69. deepak says:

    dear sir
    under sale in transit my firm in maharashtra and i purchased from gujarat and on lr i sold in sez in gujarat against c form so this sale are legally also there are no tax in sez

  70. deepak says:

    dear sir
    my firm situated in mahrashtra i purchased from gujarat and on road i sale in sez situated in gujarat at mundra so this sale are legally from mahrashtra against c form

  71. kumar says:

    dear sir,

    if want purchase iron in andhrapradesh and sell it in andhra pradesh, does my turnover will be added in VAT rules. if this turnover should be added what is the other way of sale legally.

  72. hemant says:

    dear Lalit,
    From your query, it seems that there are 2 types of Transactions. 1) Delhi /Alwaye(kerala) /Delhi.
    2) Goods to be exported from Chennai/cochin port.
    In first case whether it is a same material which is recd in delhi and further it is to be exported.
    In that case you can directly give instruction to your Kerala supplier to dispatch at chennai/cochin port for further to be exported. In this case since this is export order Sales Tax is nil against Form H to be issued by you.
    2)If the supplier from kerala has dispatched the material to Delhi and if it is for your stock than you have to issue form C to Kerala supplier. 3) If in delhi you are selling it directly to your customer in delhi than there will be sale in transit6(2) sale i.e E1 transaction. In this case you have to endorse the LR in favour of your customer without accepting the material but will directly delivered to your customer in delhi from Kerala. The LR should be prepared as Consignor Kerala Supplier , Consignee Your end customer name and address A/c your Co name.You will be issuing form C to your kerala supplier against E1 form from him..
    Hope the query raised by you has been replied.

  73. Lalit Kumar Sharma says:

    We are regd dealer in delhi purchased goods from a supplier in Alwaye (Kerala)and billed to delhi at same time we want to goods to be transfer goods to chennai/cochin port for export.We dont have any branch in chennai/cochin.My question for you is

    01.Can we transfer theses goods and what are the document required so that we dont face any difficulties from tax authorities in way trasit to chennai/cochin
    02.Any form what so ever involve in this transaction.

  74. Pranay Gopale says:

    Sir,
    I am in Pune (Maharashtra State). I want to purchase goods from Mumbai(Maharashtra State).My customer is in Gujrat. My querry is that can my supplier in Mumbai directly move the goods to my customer in Gujrat? Can I get any sales tax benefit as I will purchase @ 12.5%VAT and sell to my customer in Gujrat at 2% CST.Are there any forms involved apart from ‘C-Form’.
    Thankyou.

  75. PRABHAKAR KULKARNI says:

    We are Private Limited Co. having its registered in Mumbai (registered under CST & VAT do not have any manufacturing activity) got an order from Delhi party for supply of Incinerator material and Furnace Vessel to be supplied in Punjab to the end user. (The Co. which has issued P.O. to us is not end user)

    Purchase Order terms are PO Value + all taxes and duties within India shall be to the buyer’s account (i.e. reimbursable).

    We got the Vessel manufactured from Gujarat and sold (Sale in Transit). The seller has billed us Assessable value + ED + CST + Transportation.

    The Incinerator material was procured from the party in Delhi (who had purchased the same from the manufacturer In south) and directly supplied to Punjab. This was also sale in transit to us and to end-user.

    Our Purchase orders on both the above supplies were PO Value + all taxes and duties reimbursable. For incinerator material since the transaction was sale in Transit the party raised Debit Note for ED & CST on us; based on the actual invoices of manufacturer.

    For both the supplies the end user got the ED & CST Invoices (for availing Cenvat).

    Now as per P.O. we have raised our commercial invoices and Debit Note for the reimbursement of ED & CST (for sale in transit invoices as well as for manufacturer’s invoice i.e. Vessel)

    We shall be grateful if you could educate us on whether we are right in raising the Debit Note for reimbursement of ED & CST against our supplier’s invoices (as we have already received Debit Notes from the supplier of Incinerator material).

  76. Please let me know,

    1. “A” has purchased the goods, against form C, from another state.
    2. “A” has asked the supplier to get 15 L.R. of various quantities.
    3. The material is kept at transporters godown.
    4. “A” can sell the goods, against sale in transit, by endorsing the l.r.
    5. Material is sold within two months from the date of receipt at transporters godown, to same customers on various days. They may have paid the demurrage charges to the transporter.
    6. “A” obtains the form C from all the customers.
    7. Sale tax authority says, the same is not allowed, because the customers are same, who have bought the material on various days, and two months is longer period. So they have disallowed the transaction?
    Is this correct?

  77. Tango_Charlie says:

    Plesae let me know the date of Invoice of B.

    If “A” is the manufacturer “B” is the agent/buyer for “A” & “C” is the ultimate buyer. Assuming that “A” is in New Delhi & B&C are in Himachal Pradesh.

    Incase “A” raise bill on 23.05.10 to “B” mentioning “C” as ultimate buyer. Goods reach in HP on 20.06.10, What is the correct date of invoice to be raised by “B”? “B” will raise the bill after materials received by “C” or before that?

    Thanx,

    Naba Kumar Mishra

  78. Rajkumar Sharma says:

    What would be the liability of the second seller incase the First Seller does not issue Form E-1 after receiving C form from the second seller?

  79. Mehta N says:

    Hello

    We are dealer of Chemicals (Say- VC) having Mahahrashtra ST regn and Non localise dealer registered with Guj ST with Mumbai address.

    We purchase goods from Mumbai and from Kandla.
    also having excise regn and pass modvate

    Q.1 purchase from Mumbai deler (say-A) and A raise bill to VC (Guj NLD) charging 2% CST and VC sale to gujarat customer (say-C) , modvate directly A to C , So can VC sale goods on sale in transit and how LR to be prapared? and which form to exchanged?

    Q.2 VC (Mumbai) purchase goods from Kandla Gujarat A and
    A charge 2% CST to VC and VC sales goods to Pune customer, can he sale it on slae in transit transaction and how R to b preapared?

    Q.3 VC (Guj NLD) purchase good from Mumbai dealer (A) and goods move from Mumbai to Hyderabad customer (C) A praper bill to VC (Guj NLD ) charging 2% CST and pass modvate to C , can VC sale on sale in transit basis and how LT ro be prepared?

  80. dinesh mishra says:

    will you please suggest,
    my co. white gold is situated in delhi, my supplier is in punjab and my buyer is in jammu,
    How can i send the goods directly from my supplier to my buyer
    what type of billing procedure is require and which type of form require.

  81. PARESH THAKKAR says:

    if a party at rajkot (gujarat) sales goods to party at ahmedabad (gujarat) @ 10000/- and delivery of goods are to be made at mumbai @ 15000/- . is this a E1 transaction under the cst act?

    which forms must be collected from each party?

    whether vat is chargeable by rajkot party in his bill?
    if answer to above is yes:

    input credit of tax invoice raised by rajkot dealer is available to ahmedabad party?

    at which amount rajkot party will raise the invoice?

  82. S.K. GOEL says:

    Kindly let me know in case of E-1 sale which state will be issued the Form-C and which state will be submit that Form-C.
    As an Example:
    If A(U.P.)send the Matls. to C(Gujarat)on refrence of B(Mumbai)then this is clear that A will be issue the E-1 to B and C will be issue the Form-C to B.
    Now the question is these that this C-Form issued by ‘C’ will be named to whom ‘A’ or ‘B’?

  83. S.K. GOEL says:

    Kindly let me know in case of E-1 sale which state will be issued the Form-C and which state is will be take the benefit of that C-Form.
    As if A(U.P.)send the Matls. to C(Gujarat)on refrence of B(Mumbai)then this is clear that A will be issue the E-1 to B and C will be issue the Form-C to B.
    Now the question is these that this C-Form issued by ‘C’ will be named to whom ‘A’ or ‘B’?

  84. Gangadhar.S.K says:

    Sir,

    Our firm situated at Karanataka and some times we have been procurring material from neighbour states like Maharashtra, AP, UP, Gujarat etc. So pl confirm whenever material dispatched by supplier from other states, is it necessary to provide VAT from (VAT Form 515)from our end. Can any one guide in this regard.

  85. A Menezes says:

    If the buyer executes a sale in transit, how does the buyer prepare the invoice.

    Do we mention Sale in Transit against Form E1 u/s 6(2) –

    Can someone guide me on the invoicing

  86. MAN MOHAN CHADHA says:

    IS THERE ANY CONFUSION?

  87. MAN MOHAN CHADHA says:

    NO. GOODS ARE IN TRANSIT SO LONG AS THEY ARE LYING AT THE GODOWN OF TRANSPORTER.

  88. manish soni says:

    There is any time limit to making transit sales ?

  89. Dayal says:

    Invoice raised from One state to another state, but goods delivery with in same state which tax is applicable CST or VAT? Any forms applicable?
    Invoice raised with in state but material delivery to another state which tax is applicable VAT or CST ?
    CST is applicable On inter state sale & what is interstate sale is defined as under
    Inter State Trade or Commerce In Sales Tax
    A sale or purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase–
    Occasions the movement of goods from one state to another.
    Is effected by a transfer of documents of title to the goods during their movement from one state to another.(sales In transit)

    Movement from one state to another: In above case when goods are given to carrier or transporter for transportation .the movement of goods starts at the time of delivery to carrier and terminated at the time when delivery is taken back from such transporter /carrier
    As per point two above CST is applicable if sale is done while goods movement from one state to another state.Its called E-1 transaction or sale in transit.
    suppose: X situated in Delhi purchased goods from Y in Punjab .Y booked the material on transport and send GR/RR(goods receipt note issued by transporter) to X. X instead of receiving material from transport himself sold the material to Z in Delhi (same state) by endorsing RR/GR
    in the name of Z.Z takes the delivery from the transporter .
    In this case sale from Y to X is covered under CST and X to Z is also covered Under CST as sale in transit.
    To complete the transaction X will issue C form to Y ,
    Y will issue E-1 form to X
    Z will issue C form to X
    In the above case even X & Z both are situated in Delhi but the sale transaction is covered under “sale in transit” clause of CST act so CST will be applicable and vat is not be charged.
    CST is applicable only if goods movement is from one state to other state .If goods movement is started from one state and ends in same state then CST will not be applicable.

  90. Bhavin Shah says:

    01) if material (Exciable) buy from gujarat, want to sale in gujarat, please do let us know how do we bill to patry?, what tax charged manufacturer in his invoice? and how do we prepare our commercial invoice and how much tax we make in invoice

    02) if material (Exciable) buy from gujarat, want to sale in put of gujarat, please do let us know how do we bill to patry?, what tax charged manufacturer in his invoice? and how do we prepare our commercial invoice and how much tax we make in invoice

    regards,
    Bhavin

  91. prasad gowra says:

    Will you please clarify transit sales ( pre determined sales by procuring purchase orders prior to transfer of documents of title) in the light of A& G Projects and Technologies Ltd vs.State of Karnataka by Supreme Court. ( civil appeal no. 7233 of 2008 – arising out of SLP (c) No.1 065/08 Decided on 11.12.2008

  92. M.V.Kadival says:

    Dear Sir,
    There is a procedure in practice with most of the dealers handling big projects when they resort to sale in transit for baught out items.
    Dealer “A” places order on dealer “X” for a trunkey project worth Rs.1.00 croes.

    Dealer “X” places order for one of the components on delar “Y” for Rs.10000.00 and asks him endorse LR in favour of dealer “A” under E-1 Form.

    Dealer “X” railes commerical bill on Dealer on “A” as under:

    Basic Price 12500.00
    CST reimbursement; 200.00
    Total: 12700.00

    In this case Dealer “X” has collected a margin of Rs.2500.00 over the basic of his supplier Dealer “Y”. Dealer “X” is also collecting CST paid to Dealer “Y” by was of reimbursement.
    Is this course available to Dealer “X”. Becasue the turnover is exempt in the hands of X. Then he can charge tax by any mode. Would this not amount to undue enrichment.
    Please elaborate.
    Regards,

    Kadival.

  93. AMIT MALPANI says:

    Dealer register in state of Maharashtra, it purchase goods from dealer in Gujarat & issue form H under MVAT Reg. No. But the goods are exported from state of Gujarat without actually Physically moving to state of Mah. Can it be shown as Purchase in MVAT Return since the dealer is not registered in state of Gujarat.

  94. Arul kumar says:

    The contribution is very much enlightening.

    Thank you,

    Regards,

    Arul K

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