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Crucial date of sale for issuing C forms

C form is a form for the concessional rate of CST on the inter-state sale of goods and is issued by purchasing dealer in one State to the selling dealer in another State for the inter-state sales transactions done during the period of three months i.e a quarter.

Many a times I have received a query from different parts of the country that what is the crucial date of sale to be taken while issuing of C forms under CST Act, 1956 i.e whether date of invoice or the date on which goods are received by the purchasing dealer?

C form is a form for the concessional rate of CST on the inter-state sale of goods and is issued by purchasing dealer in one State to the selling dealer in another State for the inter-state sales transactions done during the period of three months i.e a quarter. 

Crucial date of sale becomes more so important when sale invoice in inter-state transaction is issued on the last date of quarter but the goods are actually received by the purchaser in the next quarter.

The ussual practice among all the dealers is that seller books his sale in his books of account on the date when invoice is issued, whereas, the purchaser books same purchase of goods in his books of account on the date when he actually receives such goods.

In such case it is obvious for the purchaser to issue C form according to the date on which he received the goods as on such date he enters such purchase into his books of account.

For example if ‘A’ in Delhi issues a sale invoice and dispatches goods to ‘B’ in Punjab on 31st March and books his sale on 31st March itself, but B receives the same goods on 1st April and books his purchase on 1st April, then in such case B will issue C form for such purchase in the quarter April-June (more so in such States where ‘C’ forms are generated online according to the returns uploaded), whereas ‘A’ would require C form of the same transaction in the quarter Jan-March.

In such cases the question is what is the correct date of inter-state sale for the purpose of issuance of C form. The simple answer to this question is that C form is to be issued after the sale transaction is completed. Sale of goods gets completed when transfer of property in goods takes place.

Section 19 of the Sale of Goods Act provides: “Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.”

Therefore the crucial date for the issuance of C form will be the date on which transfer of property in goods takes place i.e when the title of goods gets transferred in the favour of purchaser i.e when the sales gets completed. When the transfer of property in goods takes place is a question of fact depending upon the terms of the contract and intentions of the parties.

In Kuppuswami Mudaliar & Sons vs. State of Madras (1974) 34 STC 6 (Mad.) the assessee(seller) had dispatched the goods to the purchasing dealer on 26th March, 1964, and 28th March, 1964; but the goods had actually been taken delivery of by the purchasing dealer by clearing the documents from the bank after payment of the sale price only after April 2, 1964.

At the time of dispatch of goods purchasing dealer was not registered, however when the purchasing dealer got the delivery of goods after clearing the payment to the bank, he became a registered dealer and thereby he issued C form to the seller.

C forms were not accepted on the ground that sale took place at the time of dispatch of goods and at that time purchasing dealer was not a registered dealer, hence concessional rate of CST cannot be claimed.

The question was, as to when the sales can be said to have been completed. The Tribunal took the view that the dates of dispatch of goods should be taken as the dates of sale.

However it was held by the Madras High Court that the date of sale should be taken to be the date when the property in the goods passed from the assessee to the purchasing dealers which was, when the purchasing dealers retired the railway receipts from the bank on payment of the sale price as till that time the assessee(seller) should be taken to have retained the right of disposal over the goods. As on the date of sale the purchasing dealers had registered themselves under the Act, the assessee was entitled to the concessional rate of tax.

Conclusion: From the above judgment it is clear that so long as the transfer of property in goods does not take place, the sale does not get completed. The crucial date when sale gets completed is the date when the title passes.

C form is to be issued only for a completed transaction of inter-state sale and therefore date for the purpose of issuing C form will be the date when sale gets completed.

When the transfer of property in goods takes place and consequently sale gets completed, is a question of fact and is to be decided on the basis of intentions of the parties and the terms of the contract.

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Read Other Articles from Advocate Amit Bajaj

(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

View Comments (29)

  • Dear sir

    C form can e issued after the assessment also,as these can be filed after the assessment in appeal.There is no bar under the provision of the CST ACT.

  • Dear sir

    Pl note that the c form is issued to the seller by the buyer,if you can prove
    that the goods were actually purchased and received,payment made but due to clerical mistake it could not be booked in the books of account does not deny
    the benefit of concessional tax,as the substantial right can not be taken away
    due to technical beach(SC).

  • Dear sir

    I purchased goods in February 2012 worth Rs 2.8 lacs. Of which the goods worth Rs 2.3 lacs were returned in August 2012 to the supplier. Now supplier is demanding for C form for full value(i.e. Rs 2.8 lacs) whereas my concerned CTO says c form can not be issued for returned goods. Request you to please give your opinion for a solution of this issue

  • The goods of the Invoice dated 26.03.17 received on 02.04.17, is accounted on 31.03.17 for the Inter State transaction.
    how will it affects Sales Tax Returns?
    How will it affects Closing Stock?(We Want our Stock to get Increased)
    Thanks

  • Some customers say there is problem in uploading C forms for the year 2014-2015. I was requesting them since November 2017 but till now they have not uploaded. They ask me to raise a debit note and they will give cash. Is it ok? My boss says there will be a huge penalty on us if we raise debit note now. Then what to do? What are the complications in uploading the C Form and how can we solve it?
    Please guide and explain to us.

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