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CENTRAL SALES TAX ACT, 1956

1. Background of Central Sales Ta !CST" Act

a) Constitution provides that tax on inter state sale will be only by law of

Parliament.

b) Subsequently, tax on inter state sale was levied by State on the basiswhere the goods are actually delivered for consumption.

c) The above view was held by Supreme Court in the case of State of Bo#$a% &s . T'e (n)ted *otors +nd)a Ltd )n 195 !arch). This causedhardship to dealers requiring registration with each state, filing returns andassessment, etc.

d) "n the case T'e Bengal +##un)t)es Ltd &s. State of B)'ar )n 1955

#ctober), The Supreme Court reversed its earlier decision and held thattax can be levied only by the act passed in Parliament. This made thecollection made by the States illegal. So, an ordinance was passed in$%&& to rectify the situation.

e) The based on recommendation of Taxation 'nquiry Commission,constitution was amended in $%&( and Central Sales Tax ct was passedand imposition of central sales tax was made effective from 1 st -ul% 195 .

/. 0$ ects of CST 2

a) *ormulate principles for determiningi) +hen Sale Purchase ta-es place in the course of inter state Trade or

commerce

ii) +hen sale or purchase ta-es place outside the State

iii)+hen Sale Purchase ta-es place in course of 'xports "mports.

b) To provide for levy, collection and distribution of taxes on sale of goods inthe course of inter state trade or commerce.

c) To declare certain goods to be of special importance in the inter statetrade or commerce and specify the restrictions and conditions to whichstate laws imposing taxes on sale or purchase of such goods of specialimportance called as declared goods) shall be sub ect to/

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0. CST is payable in the State fro# 3')c' t'e #o&e#ent of goodsco##ences.

1. Ta on +nter State sales of goods /CST is tax on inter state sale of goods.

&. Sale is a )nter state sale whena) Sale occas)ons #o&e#ent of goods fro# one state to anot'er.

0r

b) Sale is effected by transfer of docu#ents during their movement fromone state to another.

(. Entr% 9/A of l)st of cond)t)ons2 Taxes on sale or purchase of goods other than 2ewspaper on inter state sale.

. +ntra state Sale 2Sales 3 where both buyer and seller are from the same state, e.g. 4!umbaito Pune5 or 4 hmedabad to Surat5. These are intra state sales, i.e. salewithin the state).

4. +nter state Sales2

+hen buyer and seller are in different state, it is inter state sale, e.g. when

buyer is in Chennai Tamil 2adu) and seller is in Trivendram 6erala) or llahabad 7.P.) to 8yderabad .P.)

%. L)a$)l)t% of CST /

'very dealer shall be l)a$le to pay tax on all sales of goods other thanelectrical energy) effected by him during the course of )nter state trade or co##erce

Central Sales tax is a 3

i) 9evy on Sale of goodsii) Sale as def)ned u s : g)iii) Sale should be of all goods other than electrical energy as defined u s :

d)iv) Sale should be in the course of )nter state trade or co##erce as

defined u s 0.

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$;. Categor)es of Sales /

a) "nter State Sale

b) Sales during "mport exportc) "ntra state sales i.e. within state)

$$. +nter State Sale /Sec

sale or purchase of goods shall be dee#ed to ta-e place in the course of inter state trade or commerce if the sale or purchase