Form C is issued by the dealer for purchasing goods from 
the dealer out side the state in which he resides the 
effect can be understood ny looking at following example

IF Mr A Registered Dealer in Hyderabad (AP) wants to 
purchase  goods from Mr B a registered dealer in Mumbai.Mr 
B who is selling the goods will charge VAT @ 4% or 12.5% on 
the goods if Mr A issues him "C" Form then Mr B should 
Charge him CST @ 2% so Mr A is SAving Tax.

Form D serves the same purpose but it has to be issued by 
government