Central Sales Tax Act 1956

Types of Taxes Direct Taxes Income tax Wealth tax Indirect taxes Sales tax Customs duty Service tax Excise duty etc.

Scheme of Act (applicable to whole India) Ch. 1 – definitions Ch. 2 – indicates if sale is inter state or not Ch. 3 – deals with liability to pay tax Ch. 4 – goods of special importance Ch. 5 – rules regarding liability in case of liquidation of a company Ch. 6 – Central Sales Tax Appellate Authority

Current Taxes in India Intra-State Ex. Duty – 12% Edu. Cess – 3% VAT– 5%/12.5% Imports Customs Duty Basic – 10% CVD – 12% Ed. Cess – 3% Service Provider Serv. Tax – 12.36% Factory Retailer Dealer  Toll Manufacturer  Goods Transporter Serv. Tax-12.36% Interstate purchase (CST) Stock transfer (No tax) Octroi – 0.5 to 5% Inter-State Ex. Duty – 12% Edu. Cess – 3% CST – 2% Local purchase VAT – 5%/12.5% Other Service Provider Serv. Tax – 12.36% Local purchase VAT – 5%/12.5% Other Service Provider Serv. Tax – 12.36% Central LevyState Levy VAT rate may range from % depending on the State

Features of CST Act The act provides for tax on inter state sales Tax levied by central government but collected by respective state governments With regards to provisions like returns, assessments & appeals, VAT provisions apply Lower rate of CST is charged on concessional forms like FORM C No sales tax on Stock transfers and export import.

Definitions (Section 2) Sec 2(a) - Appropriate State Sec 2(aa) - Business Sec 2(b) - Dealer Sec 2(c) - Declared Goods Sec 2(d) - Goods Sec 2(dd) - Place of Business Sec 2(g) - Sale Sec 2(h) - Sale Price Sec 2(k) - Year Sec 2(j) - Turnover

Principles of Central Sales Tax Section 3 : Inter State Sales 3(a) : Sale from one state to another 3 (b) : Sale by transfer of documents Section 4 : Sales outside a state a sale which is inside a state is outside for all the other states in matters regarding sales tax.

Section 5 (sales in course of export & import) Any sale which occasions any export Any sale which occasions any import Last sale for the purpose of complying with terms of an export Seller furnishes a duly filed declaration by the exporter If designated carrier purchases ATF for international flights

Registration of a dealer Compulsory registration No initial exemption is allowed, registration is required for interstate dealers even for a small amount. Voluntary registration Provision mainly useful when the dealer makes purchases in inter state but all his sales are within the state.

Procedure of registration Application for registration Deemed to be liable Condition for issue of certificate Grant of certificate of registration Demand of security Surety bond Amendment in certificate

Cancellation of registration By authority When dealer has Ceased to exist Stopped business Failed to comply with provisions Failed to pay penalty Any other sufficient reason By dealer When the dealer has Stopped business Is not liable to pay tax Any other sufficient reason

Exemptions from CST Subsequent sales SEZ units and developers Foreign missionaries Sale in course of export Penultimate sale Sale in course of import

Sales Tax Authorities Hierarchy Excise and taxation commissioner Joint excise and taxation commissioner Deputy excise and taxation commissioner Assistant excise and taxation commissioner Excise and taxation officer Excise and taxation inspector

Powers and functions of Authorities Demand production of accounts books Power to seize the books Power to search Power to seize the goods Reassessment Power to call for information from banking companies

Powers of State Governments with regards to Sales Tax Power to exempt goods Power to exempt certain class of industry Power to amend schedule “c”* Power to make rules *by giving notification not less than 21 days notice of its intention to do so

Goods of special importance Cereals Coal Cotton Crude oil Iron and steel Jute Oil seeds Pulses Man made fabrics Sugar LPG

Declaration Forms FORM A application for registration FORM Bcertificate of registration FORM Cconcessional form, sales 2% FORM Dcertificate for government dealer FORM E-Icertificate by 1 st dealer in case of section 6(2) FORM E-IIcertificate by 2 nd dealer in case of section 6(2) FORM Ftransfers otherwise than sale FORM Gindemnity bond for loss of form FORM Hcertificate of export FORM Icertificate by SEZ unit FORM Jcertificate by UN agency in India