TAX ON INTERSTATE SALE

Local VAT as well as CST will be applicable to such transaction. 

if he sells the goods at chennai then local VAT and CST will be applicable.

sir,

please clarify point no 1,2 and 3 separately. Because when CST is applicable where is the local rate of tax

Dear Mr. Giri,

I have givem my views below your querry.

X Co in Karnataka importing goods from outside the country and taking delivery at Chennai Port. Then he make the following transactions.

1.After taking delivery at Chennai port he will sell the goods to Y co at Hyderabad. The goods movin from Chennai to Hyderabad. X co will raise his tax invoice at Karnataka and given to the transporter at Chennai before moving to Hyderabad. What tax to be charged by the X co and whether it is correct to raise an invoice at Karnataka and handed over at Chennai?

Reply: If the sale is termed as ‘Sale in the course of Import’ i.e, X co which has imported the goods and sold to a party at Hyderabad by transfer of documents and he should clear the goods from the customs so that no sales tax can be levied as the goods suffer duty equivalent to 4% sales tax while clearing the goods (Addl. Customs duty).

But as you have queried, if X co. takes delivery of the goods and sells to a buyer at Hyderabad, it becomes a separate sale and CST has to be charged at concessional rate if the buyer gives the Form C or at local rate as per VAT schedule of Karnataka state .

He can raise an invoice from Karnataka for the sale goods from the premises of customs at Chennai.

2.After taking delivery at Chennai, he will sell the goods at Chennai itself. Whether X co has to charge CST or not. Or the local rate of Tamilnadu VAT Act is to be charged?

Reply: if X co. takes delivery of the goods and sells to a buyer at Chennai itself, it becomes a separate sale and CST has to be charged at concessional rate if the buyer gives the Form C or at local rate as per VAT schedule of Karnataka state

 3. X co will bring the said goods to Karnataka and sold at Karnataka. Whether local rate of tax to be levied?

Reply: If the goods are brought to Karnataka and sold to their customers in Karnataka, it becomes a sale within the state and attracts the VAT at the Schedule rates as contemplated in the Karnataka VAT Act.

The replies are my personal opinion.  You may kindly obtain the opinion of an Sales Tax Advocate who is in Karnataka State before any action is taken.

Please reply for these queries and help. Thanks in advance

Title and ownership of the goods shall be determined by the documents only "Nemo dat quod non  habet (No one can pass a better title than what he has). There must be a sale only by the transfer of documents of title. For a sale on the spot, no document is necessary. On the spot itself, the goods shall be passed from seller to purchaser. In the  case of the sales, which require transportation, there must be proper documents. The object of  the title is to secure the goods shall  reach the proper person, and also prevents evasion of tax.

well advised by Mr. Prakash Babu .

I sincerely disagree with the opinion of Mr. Prakash Babu. My opinion is the

X Co in Karnataka importing goods from outside the country and taking delivery at Chennai Port. Then he make the following transactions.

1.After taking delivery at Chennai port he will sell the goods to Y co at Hyderabad. The goods movin from Chennai to Hyderabad. X co will raise his tax invoice at Karnataka and given to the transporter at Chennai before moving to Hyderabad. What tax to be charged by the X co and whether it is correct to raise an invoice at karnataka and handed over at Chennai?

Answer:- In this present situation there are two separate transactions. One is the import of the goods by X co. and the second one is the separate transaction  involving interstate sale of goods. For the first transaction X co. has to pay the import duty whichever rate is appilcable. Now in the second transaction, there is physical movement of goods from chennai to hyderabad. so there is a inter state sale. Hence CST would be applicable. Here the key point in sales tax is the physical movement goods. the resdential stauts of buyer is not important. he may be from tamilnadu or gujrat or any state yet in every case CST would be applicable because the goods are crossing the territorial frontiers of tamilnadu and are being used outside the borders of Tamilnadu

2.After taking delivery at Chennai, he will sell the goods at Chennai itself. Whether X co has to charge CST or not. Or the local rate of Tamilnadu VAT Act is to be charged?

In the present case, the local VAT rate of Tamilnadu would be applicable because the the physical movement of goods is not resulting in to crossing of frontiers of Tamilnadu. It is an intra-state sale. Hence local VAT would be applicable.

3. X co will bring the said goods to Karnataka and sold at Karnataka. Whether local rate of tax to be levied?

Now here there may be two situations in this case. In one situation, if the seller(X co.)sells the goods to any customer (who will use or move the goods in Karnataka once it is sold) in chennai only then CST would be applicable because there would be an origination of physical movement of goods from chennai and it would result in crossing of borders of tamil nadu.So it would be an Inter stae sale and hence CST would be applicable. Now in the second situation, if seller brings the goods to karnatak from chennai and then sells it to a customer in karnataka who uses it in karnataka only then it would be a case of Intra stae sale and hence Local VAT rate of Karnatak would be applicable. Remeber if seller brings the goods from chennai to karnataka and does not sell it then there would be no incidence of sales tax becuase there is no sale at all. He has to just pay the import duty when goods are received at chennai.

Sirs,

I am a registered Dealer in DVAT. I purchased goods from Uttar Pardesh & asked to my supplier that the delivery of goods will be made in Haryana to my Costumer as he will be consignee & I am the Buyer. Then I want to know that I am liable to submit T 2 form applicable in delhi for movement of goods.

Thanking You.