CA Vinod Kaushik

CA Vinod Kaushik

What is E-I E-II Sales: Before starting this article is it is important to explain the meaning of E-I and E-II sales. As per CST law tax is levied at single point i.e. when the goods are sold from Haryana to Delhi then tax should be levied in Haryana only even if the goods are sold further during their movement from Haryana to Delhi subject to certain conditions. If your client is buying goods from another State and selling the same during its movement to the Dealer of another State or same state then same shall be exempt from CST if certain conditions of Section 6(2) are satisfied.

Example of Form E-I Sales:EIIn the above example Dealer H of Haryana selling goods to Dealer D of Delhi and Mr. D is subsequently selling the same goods to Mr. U of U.P without taking the delivery i.e. in transit. In this transaction Mr. H will charge CST in his invoice from Mr. D but Mr. D will not charge tax in the above transaction. Now to claim exemption Mr. D has to obtain form E-I from Mr. H and give him form C. Mr. U has to give form C to Dealer in Delhi and not any other form.

Example of E-II Sales:


In case of E-II sales the Mr. H of Haryana selling goods to Mr. D of Delhi and Mr. D is transferring the documents of title to goods in favor of Mr. U during their movement and after this Mr. U is again transferring the title of goods in favor of Mr. B. Mr. B is taking actual delivery of goods and movement of goods terminate after he takes the delivery of goods. Now Mr. H will issue form E-I to Mr. D and Mr. D will issue form C to Mr. H, Mr. D will issue form E-II to Mr. U and Mr. U will issue form C to Mr. D. Final Dealer Mr. B will issue form C to Mr. U of U.P. The number of parties may be more then above example in case of E-II sales, but every party after first party has to issue form E-II to his buyer until he is the final Dealer.

Necessary conditions to claim exemption:

  1. Goods must remain during movement when transfer of documents is made.
  2. First sale may be 3(a) or 3(b) sales but subsequent sale must be by transfer of documents.
  3. Sales must be made to a registered dealer.
  4. Proper declaration forms must be furnished by each party.

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  1. ansari naseer says:

    So long goods are moving out of Haryana and CST is being paid to that government it will matter to authorities in which state goods are being delivered .But LRs and
    Invoices should clearly mention the place of commencement of Inter State movement and destination state
    Further queries on the topic are welcome.

  2. ansari naseer says:

    In my opinion it will be a tricky situation.The Delhi purchaser who is first purchaser in the chain of subsequent sales,will have to notify Haryana seller and in the documents of title and LR that delivery of goods will be taken in the state of UP.For govt of Haryana place of delivery is not material so long Haryana seller is charging and paying CST to Haryana state.
    During the inter state movement of goods which commences from Haryana the Delhi deal
    er’s sale will be covered u/s 3(b) of CST Further queries on the issue are welcome.

  3. AD says:

    Very good explanation Sir.
    Finally my concepts of Form E-1 & E-II are clear.
    keep it up and hope to find your articles further in future.

  4. Shankara Narayanan says:

    Dear Vinod,

    on the E-II sales, is it right for Mr. H (who is the first seller) to issue form E-I. As per the first example given, I still believe that Mr. D is the one who should issue E-I and Mr. U should issue E-II. Please clarify

  5. Shaikh AbdulGani says:

    Sir, See you example 1

    When Goods starting from Haryana which required road permit for movement of goods, in road permit I am mentioning that goods will be delivered in UP, (pre determined sales), in this case whether it will be treated as Transit Sale ?

    Also brief on
    => Transfer Document ? How ?
    => Declaration Form by each party ? Format ?

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