Answer / jwilson

X Co.in Maharastra place order to Y Co in Kerala for a
material and Y Co.in Kerala Place order for that material
to Z Co. in Chennai and inform to supply directly to X in
Maharashtra .Here X is purchaser of Y and Y is the
purchaser of Z and Y asking Z to give the ownersp of
material to X insted of Y.Thais is sale in transit.Here
Consiner is Z and Consinee is X.Here other than C form
there is E-i and E-11 form also.Y purchaser of Z will give
C form to Z in exchange of E-1 and Y the seller of X will
get C form from X the purchaser.if X sells that matrl to A
in Maharashtra and give A E-II form and should charge 0%
tax.this is to avoid double taxation.

Answer / abhivirthi tax and industrial

An inter-State sale or inter-State purchase which is
effected by transfer of document of title to the goods
during their movement from one State to Another is called
sale in transit.

In the course of inter-State trade or commerce goods may
move from State to State. To save handling charges, the
traders may resort to sale by transfer of documents of title
during the course of inter-State movement of goods as laid
down in Section 3(b). They may save handling charges, but
they have to pay tax every time a sale is made which will
result in price hike and in order to prevent price hike
Section 6(2) has been designed to prevent cascading effect.

An inter-State sale or inter-State purchase which is
effected by transfer of document of title to the goods
during their movement from one State to Another is called
"Sale in Transit".

In simple:

The dealer who effects first interstate sale under Section
3(a) must issue Form E I to the buyer and charge Central
Sales Tax at concessional rate and get C Form. (First seller
has to issue E I Form to the buyer and obtain C form from
the buyer)

In case where the registered dealer purchases goods from one
registered inter-state dealer and sells the same while in
transit, to another registered inter-state dealer, the sales
will be exempted from CST on submission of “Form E-II” to
the Department.

The dealers who effects subsequest sales must issue Form E
II to the subsequent buyers and also issue Form C to the
sellers from whom the goods were purchased under Section
3(b) and the subsequent seller gets CST exemption. (Second
and subsequent sellers has to issue E II Form). The
subsequent sellers should not handle the goods physically
and if the goods were handled phycally subsequent transfer
will not be made. (Subsequent seller has to issue E II Form
to the buyer and obtain C form from the subsequent buyer)

When the goods were taken delivery or physically handled the
movement of goods comes to an end and such dealer or person
will be treated as final buyer and hence the final buyer
must issue C form to the last seller to him as the transit
chain breaks and the cost of the goods will be the Cost of
the goods + Central Sales Tax (Concessional rate).

Form E-II is used for claiming the exemption from payment of
CST.

Reply from:

ABHIVIRTHI Tax and Industrial Consultancy
R.R.JAGADEESAN
VAT Practitioner and Industrial Consultant
H-63, Palaami Enclave
New Natham Road
Madurai-625014
Cell: 9994990599

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