cst act ca janak vaghani mumbai
DESCRIPTION
CST ACTTRANSCRIPT
Important Provisions of CST Act
BY CA JANAK VAGHANI
Important Provisions of CST ActImportant Definitions- Section 2
Sale in the course of
Inter-State Trade- Section 3
Situs of Sale- Section 4
Sale in the Course of
Import or Export-Section 5
Definition of term Business-S.2(aa) The term business includes;-
Any activity of buying or selling of goods
Any transaction in the nature of trade or commerce
Whether carried with profit motive or not
Any transaction incidental or ancillary to business trade or commerce
Whether sale of capital goods is business?
Whether charitable trust or NGO or service provider is covered?
Whether job worker is covered?
Important Definitions -Section 2(g) Term Sale
Sale- Section 2(g)The term Sale means any transfer of property in goods from one person to another for cash or deferred
payment or for any other valuable consideration and includes following deemed sales;- (i)a transfer, otherwise than in pursuance of a contract, of property in any goods (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of
a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by installments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for
cash, deferred payment or other valuable consideration; (v) the supply of goods by any unincorporated association or body of persons to a member thereof for
cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as a part of any service or in any other manner whatsoever, of goods, being food
or any other article for human consumption or any drink(whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration,
but does not include a mortgage or hypothecation of or a charge or pledge on goods.
Important Definitions- Section 2 (g) -Term Sale Thus the definition of term sale is at par with local act
All deemed sales are taxable under the act
All provisions of act including sections 3, 4, 5, 6, 8 9 etc. shall apply to deemed sales
As per section 6 tax is payable under the act
By any dealer on inter-State sales which will include
deemed sales also
Section 2(h)- Sale Price Sale Price means all amount payable to selling dealer
Includes any sum charged for anything done
On or before delivery of goods but excludes;-
cash discount
cost of freight and installation
When charged separately
It includes excise duty
Whether service tax or octroi will be included in sale price?
Whether cost of transit insurance will form part of sale price?
Sale Price – works contract- section 2(h) Proviso to Section 2(h) of the act provides for
determination of sale price in case of works contract sales
Accordingly power is conferred upon parliament to prescribed deduction for labour etc., by way of rules
No rules are made till date
Till then Provisions of local act shall apply?
Inter-State Sale- Section 3(a) and (b) Section 3 of the Act provides when a sale or purchase of goods is
deemed to have effected in the course of inter-State trade or commerce
Section is divided in two sub sections (a) and (b)
Accordingly, a sale or purchase shall deemed to have effected in the course of inter-State trade or commerce, if the sale or purchase;-
(a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of document of title to the goods during their movement form one State to another
Inter-State Sale- Section 3(a) and (b) Test to determine inter-State sale is movement of goods
and not the ;-
place of buyer or seller, or
Place of preparation of sale bill, or
Place of buyer mentioned in sale bill, or
Place where payment is made, or
Place where books of accounts are mentioned
Place where property in goods passes
Inter-State Sale- Section 3(a) and (b) Another test is while goods are in transit from one State to
another sale is effected by transfer of document of goods
During their inter-State movement
Explanation 1 provides when inter-State movement of goods shall commence or terminates
Accordingly the movement of goods shall deemed to have commence when goods are delivered to a carrier or bailee for transmission
And it terminates when delivery of goods is taken from him.
Inter-State Sale- Section 3(a) and (b) Thus sale by transfer of document of title to the goods
should take place
while goods are in custody of the transporter
Once delivery is taken form the transporter thereafter sale takes place
Then it will be a local sale and not inter-State sale
It is not necessary that inter-State movement of goods should have commence as a result of sale and then sale by transfer of document of title to the goods
Even inter-State movement of goods is otherwise then sale say branch transfer
and sale is effected by transfer of document of title to the goods then it will be an inter-State sale
Inter-State Sale- Section 3(a) and (b) Explanation 2 provides that if the goods move from
one State to another and
Ultimately the movement terminates in the same State then
It will not be deemed to be an inter-State sale .
Certain Issues Inter-State sales between dealers in same State
possible?
Sales to ONGC Off Shore whether inter-State sale?
Inter-State sale in case of deemed sales when?
Inter-State sale of intangible or incorporeal goods?
Dispatch of goods to branch or agent or HO under specific contract whether branch transfer or inter-State sale?
Situs of a sale or Purchase –S. 4 States have power to levy tax on sale or purchase of goods,
Which takes place inside the State
Section 4 Provides when a sale or purchase of goods takes place inside the State
A sale or purchase of goods shall deemed to take place inside a State, in case of specific or ascertained goods if at the time of contract of sale is made are within the State
In case of unascertained or future goods if the goods are within the State at the time of their appropriation to the contract by the seller or buyer.
Sale in the Course of Export s. 5(1),(3) and (5) Under article 286(3), States or Union have no power to
levy tax on sale or purchase of goods deemed to have effected in the course of import or export
Section 5 provides when a sale or purchase of goods shall deemed to have effected in the course import or export
Sub sections (1) (3) and (5) provides when a sale or purchase shall deemed to have effected in the course of export and
Sub section (2) provides for import
Sale in the Course of Export s. 5(1) Sale or purchase of goods shall deemed to have
effected in the course of export of goods outside the territory of India only if it,
Either occasions export, or
Is effected by transfer of document of title to the goods after such goods have crossed the custom frontiers of India
Sale in the Course of Export s. 5 (3) Sub section (3) provides that the last sale or purchase of any
goods
Preceding the sale or purchase occasioning the export of those goods
shall also be deemed to have effected in the course of export, if it took place
after and was for the purpose of complying with the agreement or order or in relation to such export
Sub section (4) read with rule 12(10)provides for production of H form mandatorily.
Purchase of Aviation Turbine Fuels. 5(5) Sub section (5) provides that purchase of aviation
turbine fuel by designated Indian carrier
for the purpose of its international flight
Shall be deemed to have taken place in the course of export
Designated Indian carrier means any carrier notified by the Central Government by way of Notification in official gazette
Sale in the Course of Imports. 5(2) Sub section (2) provides when sale or purchase of goods is deemed
to have taken place in the course of import
A sale or purchase of goods is deemed to have taken place in the course of import of the goods in to the territory of India only if it,
Either occasions such import, or
Is effected by transfer of document of title to the goods
Before the goods have crossed the customs frontier of India
Certain Issues Whether it applies to sale of goods at shops outside the custom area?
Whether it applies to sale at Free Trade Zones?
Whether high seas sale is possible when the goods are in Bond?
Whether Air way bill is document of title to the goods?
What are the evidences to prove high seas sales?
Sale of Goods to ocean going ship or airlines for service of food to the customer in inter-national flight is export?
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