Central Sales Tax Exemptions and Filing Returns

Central Sales Tax Exemptions and Filing Returns

The Central Sales Tax (CST) is a levy of tax on sales, which are effected in the course of inter-State trade or commerce. According to the Constitution of India, no State can levy sales tax on any sales or purchase of goods that takes place in the course of interstate trade or commerce.

CST Transaction Forms:

All dealers need to follow certain guidelines and give declarations in prescribed forms to the buyer. Sales Tax authorities print and supply different forms for various purposes, each form being listed below.

Form C

This form allows the purchasing dealer to get goods at concessional rates from the seller.

Form D

This is issued by the government department which purchases the goods.

Form E1

This is issued by the dealer who initiates the inter-state movement of goods.

Form E2

This is issued by the subsequent seller when the goods move from one state to the other.

Form F

This is issued when the goods are sent on consignment or on branch transfer to a different state.

Form H

This is issued by an exporter for the purchase of goods.

Form I

This is issued by dealers in Special Economic Zones.

Sales Tax Exemptions:

States offer tax exemptions in certain cases, which can be humanitarian or to avoid double taxation.
  • Sellers with genuine state resale certificates are exempted from tax when they resell products.
  • Products sold to charities or schools are provided tax exemptions.
  • There are a list of essential and local commodities which are exempted from sales tax.

PAYMENT OF TAXES

The tax should be collected by the registered dealer, who sells goods in the course of inter-State trade or commerce and shall be paid by him into the Government treasury in challan No. MTR 6, before filing return, within the time, as may be prescribed by the State Government in the local Act.

FILING OF RETURNS

A dealer, registered under Central Sales Tax Act, is liable to file periodic returns as per periodicity and due date/s as may be prescribed under the local sales tax (VAT) law.

Note: In the State of Maharashtra, there was an old circular whereby the dealers holding CST registration certificate, but not having any tax liability under the CST Act, during a period, were exempted from filing CST return/s. However, the said circular is now modified through Trade Circular No. 20T of 2014, dated 25th November, 2014. Accordingly, with effect from 1st October 2014, all those dealers having following types of transactions must file CST returns:-

  • Inter-State sale u/s. 3 of CST Act,
  • Goods transferred u/s. 6A (1) of CST Act,
  • Sales outside the State u/s. 4 of CST Act,
  • Export sales u/s. 5(1) and 5(3) of CST Act,
  • Sales in the course of import u/s 5(2) of CST Act

The dealers, falling under any of the above referred categories, if not filing CST returns, shall be treated as defaulter/s.

OFFENCES AND PENALTIES

Simple imprisonment up to six months or fine or both are provided for the following offences:
  • Furnishing false declarations/certificates;
  • Failure to get registered or to furnish security;
  • False representation, while purchasing goods, that the goods are covered by registration certificate;
  • False representation about being a registered dealer;
  • Failure, without reasonable excuse, to use goods for the purpose certified in the C form declaration;