|
AN ATTEMPT TO SIMPLIFY E-I E-II SALES UNDER CENTRAL SALES TAX LAW
What is E-I E-II Sales: Before starting this article is it is important to explain the meaning of E-I and E-II sales. As per CST law tax is levied at single point i.e. when the goods are sold from Haryana to Delhi then tax should be levied in Haryana only even if the goods are sold further during their movement from Haryana to Delhi subject to certain conditions. If your client is buying goods from another State and selling the same during its movement to the Dealer of another State or same state then same shall be exempt from CST if certain conditions of Section 6(2) are satisfied.
Example of Form E-I Sales:
  
In the above example Dealer H of Haryana selling goods to Dealer D of Delhi and Mr. D is subsequently selling the same goods to Mr. U of U.P without taking the delivery i.e. in transit. In this transaction Mr. H will charge CST in his invoice from Mr. D but Mr. D will not charge tax in the above transaction. Now to claim exemption Mr. D has to obtain form E-I from Mr. H and give him form C. Mr. U has to give form C to Dealer in Delhi and not any other form.
   Example of E-II Sales:
| |
|
|
|
| |
 |
| |
|
 |
| |
In case of E-II sales the Mr. H of Haryana selling goods to Mr. D of Delhi and Mr. D is transferring the documents of title to goods in favor of Mr. U during their movement and after this Mr. U is again transferring the title of goods in favor of Mr. B. Mr. B is taking actual delivery of goods and movement of goods terminate after he takes the delivery of goods. Now Mr. H will issue form E-I to Mr. D and Mr. D will issue form C to Mr. H, Mr. D will issue form E-II to Mr. U and Mr. U will issue form C to Mr. D. Final Dealer Mr. B will issue form C to Mr. U of U.P. The number of parties may be more then above example in case of E-II sales, but every party after first party has to issue form E-II to his buyer until he is the final Dealer.
Necessary conditions to claim exemption:
- Goods must remain during movement when transfer of documents is made.
- First sale may be 3(a) or 3(b) sales but subsequent sale must be by transfer of documents.
- Sales must be made to a registered dealer.
- Proper declaration forms must be furnished by each party.
By Vinod Kaushik, ACA
|
