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Rahul Goyal (Student)     22 June 2010

List of Taxes

Suppose company A is importing edible oil from some other country for the purpose of selling in the domestic market. The edible oils are coming fully packed in bottles and company A is just acting as a dealer in the domestic market.


Now suppose that consignment lands in State x of India. Now this company wants to do business in other cities of India as well. For this purpose they choose Road as a medium of transport.


In this case what are the taxes levied.


Note:- Company A here is not doing any value addition at any stage. It is just selling in various states.


 8 Replies


VAT and CST will be applicable in such case. Company A will have to get registered under the relevant state VAT act and under CST act even if there is no value addition but VAT will still be applicable since its a consignment sale. Although the syatem of VAT seeks to levy tax on the valuee adition but the incidence of tax in the VAT system depends upon the transaction of sales Hence VAT registration will be required.

You might also have to apply for service tax registration if the freight paid on the edible oil exceed the prescribed limits of Rs 750 in case of individual consignment and 1500 in case of other consignments and where the consignor or the consignee satisfies any of the following conditions:

i.         A factory registered under or governed by Factories Act 1948
ii.       A Company formed or registered under Companies Act 1956
iii.      A corporation established by or under any law
iv.     A society registered under Societies Registration Act 1860 or under any law corresponding to that Act for the time being in force in any part of the country
v.       A cooperative society established by or under any law
vi.     A dealer of excisable goods who is registered under Central Excise Act 1944 or rules made there under
vii.    A body corporate established or a partnership firm registered under any law
Income tax  will have to be paid on the commission earned on such consignment sale after deducting the allowable expenses and the income will be declared as business income.
Import duty if any applicable will also be paid on the import of edible oil
1 Like

Rahul Goyal (Student)     22 June 2010

Thank you sir for the information

Rahul Goyal (Student)     22 June 2010

Sir what about GST (goods & Service Tax) ?

Will it also be applicable ?


Goods and service tax has not been legislated as yet in India. GST is proposed to be implemented from 01-04-2011.

Rahul Goyal (Student)     22 June 2010

Thank you sir

Vineet (Director)     23 June 2010

Thanks for information Mr Bajaj.


Request you to please shed some more light on registration required for Service Tax in this case. Whether the party who is receipient of transport services (consigner or consignee) requires to be registered for service tax?


yes the consignor or the consignee whoever is liable to pay the freight and freight exceeds the prescribed limits and the consignor or the consignee satisfy any of the conditions as mentioned above will be liable for service tax payment and will have to get service tax registration as a service reciever under the service namely  "Goods Transport by Road"

No exemption of Rs 10 Lakh will be available in such case to the service receipent.

1 Like

Vineet (Director)     24 June 2010

Thanks Amitji for that nice piece of information.

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