Answer / selvi

Form C - As per section 8(1)(b) of CST Act, sales tax on
Inter State sale is 4% or sales tax rate for sale within
the State whichever is lower, if sale is to registered
dealer and the goods are covered in the registration
certificate of the purchasing dealer. Otherwise the tax is
higher - (10% or tax leviable on sale of goods inside the
State, whichever is higher). If the selling dealer pays CST
@ 4% or lower (if applicable), he has to produce proof to
his sales tax assessing authority that the purchasing
dealer is eligible to get these goods at concessional rate.
Otherwise, the selling dealer will be asked to pay balance
tax payable plus penalty as applicable. Section 8(4)(a),
therefore, provides that concessional rate is applicable
only if purchasing dealer submits a declaration in
prescribed form ‘C’.
D Form - As per section 8(1)(a) of CST Act as existing
upto 31-3-2007, sales tax on Inter State sale is 4% or
general sales tax rate for sale within the State whichever
is lower, if sale is to Government. Otherwise the tax was
higher - (10% or tax leviable on sale of goods inside the
State, whichever is higher). Section 8(4)(b), therefore,
provided that concessional rate is applicable only if
Government (which is purchasing goods) issues a certificate
in prescribed form ‘D’. Now D form has been abolished and
sale to Government will be treated as sale to unregistered
dealer w.e.f. 1-4-2007.

E-I and E-II form - As per section 6(2) of CST Act, first
Inter State sale is taxable. Subsequent sale during
movement of goods by transfer of documents is exempt from
tax, if the subsequent sale is to Government or a
registered dealer. This is subject to condition that such
subsequent seller obtains declaration (a) from the selling
dealer i.e. from registered dealer from whom goods were
purchased. (b) from purchaser a declaration in C form or
declaration in D form. The selling dealer has to make
declaration in E-I form if it is a first sale and in E-II
form if it is a subsequent sale. One example will clarify
the requirements. Assume that W despatches goods from
Karnataka to Orissa and raises invoice on X in Madhya
Pradesh, W charges 4% CST and pays the same in Karnataka.
During movement of goods, X sells goods to Y in West Bengal
and Y ultimately sells goods to Z in Orissa. Z takes
delivery of goods and the ‘movement of goods’ comes to end.
Sale from X to Y and Y to Z is by transfer of documents. In
this case, W will receive declaration in ‘C’ form from X
and will issue declaration in ‘E-I’ form to X. Later, X
will issue declaration in ‘E-II’ form to Y and receive
declaration in C form from Y. Finally, Y will issue
declaration in E-II form to Z and will receive declaration
in ‘C’ form from Z, which will complete the chain. If the
chain is broken, CST will be payable again.

Suppose there is a computer Inst. providing a course abc and the total fees for it is Rs.10000 per annum, now this institute gives the right to another institute to provide facility of that course on behalf of it and the fees amt. is bifercated to Regd. fees Rs. 2500, Exam fees Rs.500 and tution fees Rs.7000,now the former institute gives right to later ins. to take Rs.7000 and says that the amt. of regd. fees and Exam fees i.e Rs. 3000 must be given to it plus service tax, now we have to save the former ins. from paying service tax on Amt. 3000, how can we do this?

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