Trade Cir. No.22T of 2012 Mumbai, Dt. 26.11.2012
Sub : Clarification with regard to goods specified in the certificate of registration obtaining declaration/certificates under Central Sales Tax Act, 1956.
Gentlemen/ Sir/ Madam,
Section 8 of the Central Sales Tax Act, 1956 provides for the rate of tax on sales in the course of inter-State Trade and commerce. Further, sub¬section (1) of section 8 states that every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer the class or classes of goods that are specified in the certificate of registration of the registered dealer purchasing the goods for the purposes enumerated in sub-section (3) of section 8 of the Central Sales Tax Act, 1956 shall be liable to pay tax at notified rate i.e. @ 2% with effect from 1st June 2008.
2. In order to claim benefits of reduced rate of tax under section 8(1), it is mandatory for the selling dealers to produce before the prescribed authority the declaration in Form C. To avail benefits of reduced rate of tax this section stipulates following conditions,
(1) the dealer selling the goods must furnish to the designated authority a declaration in Form-C obtained from the prescribed authority, by the dealer to whom goods are sold, and
(2) the class or classes of goods sold under the declaration are specified in the certificate of registration of the registered dealer purchasing the goods for the purposes given in sub-section (3) of section 8.
Unless, these conditions are fulfilled the selling dealer is not entitled to claim benefit of reduced rate of tax.
3. For obtaining declarations, the purchasing dealer makes an online application to the Central Repository Officer. To streamline the process of issuance of various declarations and certificates under the Central Sales Tax
Act, 1956, a Trade Circular bearing No. 2T of 2009 was issued on 23.01.2009. This Trade Circular explains the procedure for obtaining declarations or certificates. According to this Trade Circular
(1) it is mandatory to submit online application for obtaining declarations. The statement of requirement is also to be submitted online.
(2) the concerned Central Repository officer is required to verify registration record of the dealer vis-a-vis the commodity stated in the application. In case a commodity stated in application does not find place in the registration record the Central Repository officer then rejects the said application.
4. Due to rejection of application on this ground, the dealer faces hardship. To overcome this, revised instructions are given which are as under:
(1) The dealer shall make an online application stating the requirement for declaration alongwith the name(s) of the commodity.
(2) As per provisions of section 8(3)(b) of the Central Sales Tax Act, 1956, the benefit of lower rate of tax is available only in respect of class or classes of goods specified in the certificate of registration of the purchasing dealer and the goods are being intended for re¬sale by him or are used by him in the manufacture or processing of goods for sale or in the tele-communications network or in mining or in the generation or distribution of electricity or other form of power.
(3) As per aforesaid provisions, it is mandatory for the purchasing dealer to inform to the concerned authority the class or classes of goods he is dealing in.
(4) On this background the Central Repository Officer shall,
(a) not reject the application only because the nomenclature of the goods stated in the application do not exactly match with nomenclature of the class of goods in the registration record in MAHAVIKAS.
The requirement of section 8(3)(b) of the CST Act, 1956 is that the class or classes of goods shall be specified in the Registration Certificate of the purchasing dealer. However, it is observed that many times the declarations are being
denied on the ground that the actual commodity stated in the application for declarations is not specified in the registration certificate. It is, therefore, instructed that if the commodity stated in the application is covered by the class or classes of goods specified in the CST registration certificate, then in such cases the declarations should be issued without any need to carry out the amendments to CST registration certificate.
Eg. Registration record in MAHAVIKAS shows Machinery while the description in application states exact name of the Machinery i.e. Lathe Machine or CNC Machine.
(b) verify the dealer’s record from the MAHAVIKAS, the class or classes of goods mentioned in the registration menu and goods stated in the application.
(c) not grant and issue declarations for goods that are unrelated to the class of goods dealt by the dealer i.e. the goods sought to be purchased on the declarations does not fulfill the condition (2) given in Para above.
Eg. The dealer dealing in Plywood or Readymade Garments purchases Gold Coins on the strength of declarations.
5. Needless to say that all other instructions issued vide Trade Circular 2T of 2009 remains unchanged.
6. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification. You are requested to bring contents of this circular to the notice of the members of your association.
Commissioner of Sales Tax,
Maharashtra State, Mumbai.