CENTRAL SALES TAX ACT-1956
CONDITIONS
1) There Should Be A Dealer
2)he Should Be A Registered Dealer
3)he Must Carry On Any Business
4)sale Should Take Place
5)sale May Be To A Regd Or Unregd
Buyer
CENTRAL SALES TAX
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6. The Sale Should Be Of Goods.
7. The Sale Can Be Of Also Declared Goods
(Goods Of
Specific Importance)
8. The Sale Should Take Place In Course Of
Inter State
9. The Sales Should Not Be Within The Same
State.
10.The Sale Should Not Be Outside India
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DEFINITIONS
 DEALER U/S 2(b).
He Is A Person One Who Is Involved In
The
Activities
Of
Buying
,Selling
,Distributing The Goods Directly Or
Indirectly Either For Cash Or For
Deferred Payment ,For Commission
,Brokerage Etc
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continued
Dealer Includes
1)local Authorities ,Co-operative
Societies, A Company,HUF,
Association Of Persons,firms..
2)suppliers, Broker, Del Creder
Commissioner,etc
3) An Auctioneer (govt ,Agent,etc)
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REGISTERED DEALER SEC 7
 A PERSON SHOULD REGISTER
HIMSELF U/S 7
THE REGISTRATION MAY BE
1)VOLUNTARY REGISTRATION OR
2)COMPULSORY REGISTRATION,
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Compulsory Registration
 As per section 7(1), every dealer liable to
pay Central Sales Tax has to register
himself with sales tax authority.
 As per section 6(1) of CST Act, every dealer
effecting sale in the course of Inter State
trade or commerce is liable to pay CST.
 Thus, only those dealers who ‘effect’ inter
state sales are required to register under
CST Act.
 Thus, registration under CST Act is done by
State Sales Tax authorities who are
authorised for the purpose
Voluntary Registration
 A dealer registered with State sales tax authorities
may voluntarily apply for registration under CST Act
even if he is not liable to pay Central Sales Tax
[section 7(2) of CST Act].
 He is entitled to apply for registration even if goods
sold or purchased by him are exempt under State
sales tax law.
 This application for registration can be made any
time. This provision is mainly useful when the dealer
makes purchases in Inter State but all his sales are
within the State.
 Thus, he is not liable for payment of any CST.
However, he can make purchases in Inter State at
concessional rate only if he is registered. Hence, he
can register even if he is not liable to pay any CST.
Application for registration
 Application for registration should be made in
prescribed form ‘A’ within 30 days from the
date when dealer becomes liable to CST.
 Application fee of Rs. 25
 Application has to be signed by
 (a) proprietor of business
 (b) one of the partners in case of firm
 (c) Karta or Manager of HUF
 (d) director or principal officer of Company
 (e) principal officer in case of association of
individuals or
Other documents required at
time of registration
 Normally, following are asked for –
 (a) Particulars of Directors/ partners
 (b) Copies of articles of association,
memorandum in case of company and
partnership deed if applicant is a firm
 (c) Copies of rent agreements
 (d) Nominations as Manager
 (e) List of places of business, godown
 (f) Details of machinery
 (g) Details of bankers
 (h) Photographs of directors / partners.
Certificate of Registration
under CST
 The registering authority will ensure that application is
in conformity with provisions of CST Act. He can make
necessary enquiries e.g.
 (a) particulars given are correct
 (b) Materials requested for registration are eligible for
inclusion and the goods are in fact needed for the
business.
 After he is satisfied and after obtaining required
security, the dealer will be issued a Certificate of
Registration in prescribed form ‘B’.
 A copy of the same will be issued for every additional
place of business in the State. This certificate should
be kept at principal place of business and a copy of
the certificate should be kept at each additional place
of business in the State.
BUSINESS 2(aa)
 BIZ INCLUDES
 1)TRADE,COMMERCE ,MFG AND
ADVENTURE IN NATURE OF TRADE
COMMERCE AND MFG
 ANY INCIDENTAL AND ANCILLIARY
ACTIVITIES RELATED TO MAIN
BUSINESS SHOULD ALSO BE
CONSIDERED AS BUSINESS
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POINTS TO BE REMEMBERED
 THE PROFIT MOTIVE IS NOT
COMPULSORY FOR THE SALES TAX
PURPOSE
 THE TAX IS LEVIED ON SALES NOT
ON PROFIT
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SALE -2(G)
 SALE INCLUDES
 A TRANSFER OF GOODS FOR MONEY
 TRANSFER OF GOODS FOR MONEY’S
WORTH
 TRANSFER OF GOODS ON AN AGREEMENT
TO PAY ON DEFERRED SYSTEM
 HIRE PURCHASE SYSTEM AND
INSTALLMENT SYSTEM .
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POINTS TO BE REMEMBERED
 SALE MAY BE TO A REGISTERED
BUYER OR UNREGISTERED BUYER.
 ELEMENT OF PRICE IS ESSENTIAL.
 FREE SUPPLY IS NOT SALE.
 QUANTITY DISCOUNT IS NOT A
SALE.
 MORTGAGE IS NOT A SALE.
 DEPOT TRANSFER IS NOT A SALE.
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GOODS-2(d)
 GOODS MEANS ANY ARTICLE ,THING,
COMMODITY,AND WHICH IS
MOVABLE ,HOWEVER GOODS DOES
NOT INCLUDE
 NEWSPAPERS,ACTIONABLE
CLAIMS,STOCKS, SHARES,
SECURITIES.
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POINTS TO BE REMEMBERED
 NEWS PAPERS
WHEN NEWS PAPERS ARE SOLD AS
NEWSPAPERS EITHER NEW OR OLD,
IS TO BE TREATED AS NOT A
GOODS.
 WHEN OLD PAPERS ARE SOLD AS
OLD NEWSPAPERS THEN TO BE
TREATED AS GOODS.
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FEW EXAMPLES OF SALE










SALE OF STEAM,
packaged SOFT WARE,
ELECTRICAL ENERGY
ANIMALS AND BIRDS,
UPROOTED TREES,
SECOND HAND GOODS,
REGECTED GOODS,
SIM CARD,
TRADE MARK,
LOTTERY TICKETS.
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DECLARED GOODS –SEC2(C)
 Declared Goods Includes
 Cereals ,Pulses, Coal Including Coke But
Not Charcoal, Cotton Waste , Hand Made
Garments,tobacco, Raw Tobacco, Cheroots
Of Tobacco ,Jute, Oil Seeds, Cotton In
Unmanufactured Form ,Crude
Oil,sugar,khandsare Sugar, Aviation
Turbine Fuel,refused Tobacco, Cigars ,Hides
And Skins, Woven Fabrics Of Wool.
2007 dec
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POINTS TO BE REMEMBERED
 DECLARED GOODS ARE GOODS OF
SPECIAL IMPORTANCE.IF DECLARED
GOODS ARE SOLD THERE ARE
CERTAIN BENEFITS WHICH CAN BE
OBTAINED BY THE DEALER ,WHICH
IS NOT AVAILABLE FOR THE
ORDINARY GOODS.
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TAX ON INTER STATE SALE OF
GOODS  Sale is Inter-State when
 (a) sale occasions movement of
goods from one State to another
 or
 (b) is effected by transfer of
documents during their movement
from one State to another.
INTER STATE SALE-SEC 3
 ONCE THE GOODS ARE TAKEN OUT
OF DEALERS PLACE THEN FINAL
DESTINATION SHOULD BE TAKEN
INTO CONSIDERATION AND NOT THE
ROUTE THROUGH WHICH GOODS
ARE TRANSFERRED.
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Temporary movement through
another State is not Inter State
sale  Explanation 2 to section 3 states that
if movement of goods starts from one
State and ends in the same State, it
will not be deemed to be movement
of goods during ‘inter State sale’;
even if during transit goods pass
through other State.
What is ‘Sale outside a State’
 - CST Act defines 'sale outside a State
 This definition is important as 'sale outside
a State' cannot be taxed by State
Government.
 Section 4(1) defines ‘Sale Outside a State’
in a round about way.
 The section states that ‘subject to
provisions of section 3, when a sale or
purchase is inside a State as per section
4(2), such sale or purchase will be outside
all other States’.
Sale inside a State
 Section 4(2) states that a sale or purchase of goods
shall be deemed to take place inside a State if the
goods are within the State
 (a) in the case of specific or ascertained goods, at the
time the contract of sale is made and
 (b) in the case of un-ascertained or future goods, at
the time of their appropriation to the contract of sale
by the seller or by the buyer, whether assent of the
other party is prior or subsequent to such
appropriation.
 Explanation to this section states that where there is a
single contract of sale or purchase of goods situated
at more than one place, provisions of section 4(2)
shall apply as if there were separate contracts at each
of such places.
EXAMPLES




IN CASE OF DEPOT SALE
HEAD OFFICE------------KARNATAKA
DEPOT OFFICE ----------DELHI
IF ORDER IS TAKEN FROM
CUSTOMER IN DELHI AND GOODS
ARE TRANSFERRED TO DELHI FIRST
AND THEN SALE IS MADE-INTER
STATE SALE
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CONTD.
 IF FIRST GOODS ARE TRANSFERRED
TO DELHI DEPOT AND THEN SALE IS
MADE – IT IS SALE WITHIN DELHI
AND HENCE INTRA STATE SALE.THEN
NO CST IS APPLICABLE . BUT FORM F
SHOULD BE GIVEN .
2007 dec
CENTRAL SALES TAX
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INSPECTION
 CUSTOMER FROM DELHI COMES TO
KARNATAKA AND INSPECTS THE
GOODS ,THIS IS INTER STATE SALE,.
 IF PURCHASE IS ALSO MADE ALONG
WITH INSPECTION THEN IT IS INTRA
STATE SALE.
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SUBSEQUENT SALE
 WHEN THE GOODS ARE IN TRANSIT
THEN IF BUYER RE DIRECTS THE
GOODS TO SOME OTHER CUSTOMER
OF OTHER STATE , IT IS CALLED AS
SUBSEQUENT SALE AND SHOULD BE
TREATED AS INTER STATE SALE.
2007 dec
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What is ‘Sale in course of
Export’ Section
 A sale or purchase of goods is deemed to
be in course of export of the goods out of
the territory of India, only if
 (a) the sale or purchase either occasions
such export or
 (b) is effected by a transfer of documents
of title to goods after the goods have
crossed the customs frontiers of India.

 Section 5(3) states that notwithstanding provisions of
section 5(1), last sale or purchase of goods preceding
the sale or purchase occasioning the export of those
goods out of territory of India shall also be deemed to
be in the course of such export, if such last sale or
purchase took place after, and was for the purpose of
complying with, the arrangement or order for or in
relation to such export.
 Sale should occasion the export - Occasion means
‘to be immediate cause of’. Sale and Export should
constitute part of an integrated activity. Unless such
sale occasions export, it is not a sale in course of
export.
Sale or purchase in the course of
import.
 A sale or purchase of goods is
deemed to be in course of import of
the goods into the territory of India,
only if (a) the sale or purchase either
occasions such import or (b) is
effected by a transfer of documents
of title to goods before the goods
have crossed the customs frontiers of
India [section 5(2) of CST Act].
BASIS OF CHARGE
 WHEN ALL THESE CONDITIONS ARE
SATISFIED THEN CST WILL BE LEVIED
AT SPECIFIED RATE ON
TAXABLETURNOVER WHICH WILL BE
BASED ON SALES AND NOT ON
PROFITS.
2007 dec
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SPECIFIED RATES
 FOR THE PURPOSE OF SPECIFIED
RATES BUYERS ARE CLASSIFIED
INTO THREE
 GOVERNMENT BUYER(FORM D)
 REGISTERED BUYER(FORM C)
 UN REGISTERED BUYER(NO FORMS)
2007 dec
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For Registered Buyers
 LOCAL SALES TAX RATE OR 2%
WHICH EVER IS LESS
 IF LST IS NIL –CST WILL BE NIL
 IF LST IS < 2%-THEN CST WILL BE
SAME
 IF LST IS >= THAN 2%-THEN CST
WILL BE 2%.
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FOR UNREGISTERED BUYER
 Same as LST
2007 dec
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TURN OVER.-2( j )
 TURNOVER IS AGGREGATE OF THE
SALE PRICES RECIEIVED AND
RECEIVABLE BY THE DEALER IN
RESPECT OF SALES OF ANY GOODS
IN THE COURSE OF INTER STATE
TRADE,MADE DURING THE
PRESCRIBED PERIOD.(USUALLY
QUARTERLY),LESS CST.
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FORMULA
 TURNOVER = 100*SALEPRICE
.
100 +RATE.
 TAX PAYABLE= SALEPRICE *RATE
.
100 +RATE.
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SALE PRICE –SEC 2( h )
 Sale Price Means The Amount Payable To A
Dealer As Consideration For The Goods,
Less Any Sum Allowed As Cash Discount
According To The Practice Prevailing In The
Trade,but Inclusive Of Any Sum Charged
For Anything Done By The Dealer In
Respect Of The Goods At The Time Of Or
Before The Delivery Thereof, Other Than
Cost Of Freight, Or Delivery Or The Cost Of
Installation In Cases Where Such Cost Is
Separately Charged.
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SALE PRICE SEC-2 ( h )
INCLUDES
CONSIDERATION FOR SALE
EXCISE DUTY
SALES TAX PAYABLE BY THE DEALER
SUM CHARGE FOR ANYTHING DONE BY
THE DEALER IN RESPECT OF GOODS AT
THE TIME OF DELIVERY OR BEFORE THE
DELIVERY.
 FREIGHT (IF INCLUDED IN SALE PRICE)
 INSURNCE (IF INCLUDED IN SALE PRICE)





CENTRAL SALES TAX
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CONTD
 COST OF INSTALLATION (IF INCLUDED IN
SALE PRICE)
 COST OF PACKING MATERIALS AND
PACKING CHARGES.
 BONUS OR INCENTIVE FOR ATTAINING
SALES TARGET.
 DESIGN FEES CHARGED INRESPECT OF
GOODS MFGD AS PER THE DESIGN GIVEN
BY THE BUYER.
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WHAT IS NOT INCLUDED IN SALE
PRICE
 CASH DISCOUNT OR TRADE
DISCOUNT OR QUANITITY
DISCOUNT,
 COST OF FREIGHT(IF CHARGED
SEPERATELY)
 COST OF INSURANCE(IF CHARGED
SEPERATELY)
 DEPOSITS FOR RETURNABLE
CONTAINER.
CENTRAL SALES TAX
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CONTD
 COST OF INSTALLATION (IF CHARGED
SEPERATELY)
 TAX AND FEES STATUTORILY
RECOVERABLE FROM BUYER.(OTHER
TAXES)
 SUBSIDY PAID BY GOVERNMENT NOT PART
OF TURNOVER
 SALE PRICE OF THE GOODS RETURNED BY
THE BUYER WITHIN 6 MONTHS
 SALE PRICE OF GOODS REJECTED BY THE
BUYER.
CENTRAL SALES TAX
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FORMS TO BE ISSUED
FORM C - REGISTERED BUYER
FORM E1/ E2 SUBSEQUENT SALE
FORM F - STOCK TRANSFER(DEPOT)
FORM H - SALE TO EXPORTER
FORM I - SALE TO SEZ
Form J Certificate to be issued by
foreign diplomatic mission or consulate
in India or the UN Agency
CENTRAL SALES TAX
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SUBSEQUENT SALE
 IF SUBSEQUENT SALE IS MADE TO
REGISTERED AND GOVERNMENT
DEALER IT IS EXEMPTED
However relevant forms to be
obtained (E1&E2)
 IF SUBSEQUENT SALE IS MADE TO
UNREGISTERED DEALER THEN IT IS
TAXABLE
CENTRAL SALES TAX
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