Illustrative Examples Regarding Calculation of CST
Question–
Total interstate sale for the Financial Year 2008-09 of JHA Ltd. is Rs. 1,50,70,000, which consists of the following: Sale upto 31-5-2008 – Rs 91,50,000 (If the goods are sold within the State, sales tax rate is 12.5%), Sale during 1-6-2008 to 31-3-2009 – Rs 59,20,000 (If the goods are sold within the State, sales tax rate is 4%). Out of the goods sold for Rs. 1,50,000, on 16.7.2008 that were liable to CST @ 2%, goods worth Rs. 50,000 were returned on 12.12.2008 and goods worth Rs. 1,20,000 were returned on 01.02.2009. A buyer to whom goods worth Rs. 55,000 carrying 2% CST was dispatched on 03.06.2008 rejected the goods and the same were received back on 01.11.2008. Compute the taxable turnover and tax liability of JHA Ltd.,
since all the relevant Forms have been received
.
Answer –
Notes- In absence of any information, it is assumed that the sales figures given are net i.e. excluding CST.
A) Out of sale of Rs 91, 50,000, goods worth Rs 50,000 were returned within 6 months, while goods worth Rs 1, 20,000 were returned after 6 months. Hence, deduction of Rs 1, 20,000 will not be available. Sales tax of 12.5% will be payable on this case, as no form can be supplied in respect of these goods.
B) Out of sale of Rs 59, 20,000, goods worth Rs 55,000 were rejected. Though the goods were received back within 6 months, the deduction of Rs 55,000 from sales will be available. The reason is that, as the goods were rejected, sale never took place. Hence, time limit of 6 months for return of goods does not apply.
Hence, sales tax payable will be as follows –
Net Sales Rs.
|
Sales Tax Rate
|
Sales tax Payable
|
89,80,000
|
3%
|
2,69,400
|
1,20,000
|
12.5%
|
15,000
|
58,65,000
|
2%
|
1,17,300
|
Total Sales Tax
|
|
4,01,700
|
Question–
Mr. DASHreported sales turnover of Rs. 36, 20,000. This includes the following: (i) Excise duty Rs. 3, 00,000; and (ii) Deposit for returnable containers and packages Rs. 5, 00,000. Sales tax was not included separately in the sales invoice. Compute tax liability under the CST Act, assuming the rate of tax @ 2% .
Answer–
Sales tax is not payable on deposit for returnable containers, but is payable on excise duty. Hence, aggregate sale price for purpose of CST is Rs 31, 20,000. This is inclusive of CST @ 2%.
Hence, turnover = Rs (31, 20,000 x 100)/102 = 30, 58,823.53
CST @ 2% of Rs30, 58,823.53 = Rs. 61,176.47
Question:
Inter-State sales of ‘Vikash Brothers, Cuttack, and Odisha’ was Rs. 6 lakhs during June 08 - March 09 of his product ‘ABC’. The sales are inclusive of sales tax charged in Invoice at appropriate rates. The goods were liable to tax @ 4% if sold within State of Odisha. Out of the goods sold, goods of Rs. 50,000 were returned. These were sold by Vikash Brothers in February 09 and returned by buyer in May 2009 as they were excess of his requirements. Some goods of Rs. 30,000, dispatched in December 08 were rejected by buyer and sent back in November 09. Find the ‘taxable turnover’ if ‘C’ form was received from all buyers.
Answer:
Goods returned are allowed as deduction if these are returned within 6 months, even if they are returned after close of financial year. In case of goods rejected by buyer, the condition of return of goods within six months is not applicable as per decision of Calcutta High Court in Bhavanipur Charge, Calcutta. Thus, ‘aggregate sale price’ for 08-09 is Rs. 5, 20,000. This price is inclusive of CST of 2%. Hence, ‘taxable turnover’ is Rs. 5,09,803.92 and CST payable @ 2% is Rs. 10,196.08 [as per the formula explained above].
Question:
In aforesaid example, if the goods of Rs. 50,000 were returned in December 08 (instead of returning in May 08), what would be the turnover and sales tax liability.
Answer:
Deduction is not applicable if goods are returned beyond a period of six months. Hence, ‘Gross Sale Price’ will be Rs. 5, 70,000. Out of this, the buyer will not be able to issue C form in respect of goods returned as C form can be issued only when goods are for resale, manufacture, mining or packing. Hence, sale against C form will be Rs. 5, 20,000. Sale of Rs. 50,000 will be considered as without ‘C’ form and hence, chargeable @ 4%.
Thus, turnover and CST payable is as follows:
Product
|
Aggregate Sale price Rs
|
Sales Tax rate
|
Turnover Rs
|
CST payable
|
X
|
5,20,000
|
2%
|
5,09,803.92
|
10,196.08
|
X
|
50,000
|
4%
|
48,076.92
|
1,923.08
|
|
Total
|
|
5,57,880.84
|
12,119.16
|
Question:
(i) M/s Cool Point Ltd. of Sitamarhi, Bihar sells iron rods to M/s Hot Point Ltd. in Cuttack (Odisha), both of them are registered dealers, for a value of Rs 10, 00,000 inclusive CST. The local sales tax on iron rods in Bihar is 3%. Ascertain the CST payable. (ii) IfM/s Hot Point Ltd were unable to submit form ‘C’, being an unregistered dealer, what will be the CST liability, if the local sales tax rate is 12.5%? Note – Iron rods are not ‘declared goods’.
Answer–
(i) CST payable will be 3%.
Turnover
|
=
|
(100 x 10,00,000)/(100+3)
|
Hence, Turnover
|
=
|
9,70,873.79 i.e. Rs 9,70,874
|
Tax payable
|
=
|
(3 x 10,00,000)/(100+3)
|
Hence, Tax payable
|
=
|
Rs. 29,126.21 i.e. Rs 29,126
|
[Check that tax payable is 3% of turnover and total of turnover and tax payable comes to Rs 10 lakhs]
(ii) CST payable will be 12.5%, since C form is not furnished by buyer.
Turnover
|
=
|
(100 x 10,00,000)/(100+12.5)
|
Hence, Turnover
|
=
|
Rs 8,88,888.89
|
Tax payable
|
=
|
(12.5 x 10,00,000)/(100+12.5)
|
Hence, Tax payable
|
=
|
Rs. 1,11,111.11
|
[Check that tax payable is 12.5% of turnover and total of turnover and tax payable comes to Rs 10 lakhs]
Question:
Gross Inter State sales of Kumar & Co. Ltd., Patna, Bihar; were Rs. 18, 00,000 during 07-08 (April 07 - March 08). CST was not shown separately in Invoice. Other information is as follows:
(a) The sales are of product ‘K’. If the product is sold within State of Bihar, sales tax rate is 8%.
(b) Sale of Rs. 8 lakhs are inclusive of erection expenses of Rs. 1, 00,000, excise duty of Rs. 76,000 and packing charges of Rs. 25,000. The sale price is also inclusive of trade discount of Rs. 30,000, which has been later given by issuing a Credit Note. Buyers of these goods have issued form ‘C’ for these purchases.
(c) Balance sale of Rs. 10 lakhs are inclusive of excise duty of Rs. 95,000 and outward freight of Rs. 21,000. The freight was charged separately in Invoice. Buyers of these goods have not issued any declaration under Central Sales Tax Act. Out of these sales, goods of Rs. 2 lakhs were returned by customers. The goods were dispatched in February 08 and returned in June 08, i.e. after end of the accounting year.
Find the turnover and CST payable).
Answer:
Since rate of tax is different for sale to registered dealers and un-registered dealers, we have to calculate ‘aggregate sale price’ separately.
(i) Where C form has been issued (i.e. buyer is a registered dealer and is eligible to buyer goods as per his Central Sales Tax Registration Certificate), the sales tax payable is 3%. Out of sales of Rs. 8 lakhs, deduction of erection charges of Rs. 1 lakh and trade discount of Rs. 30,000 is available. Thus, ‘Aggregate Sale Price’ is Rs. 6, 70,000. Sales tax is payable on excise duty and packing charges and hence no deduction is allowed on these accounts.
(ii) Where no C form is received (i.e. buyer is un-registered dealer), CST rate is 8%. Out of sale of Rs. 10 lakhs, deduction of freight of Rs. 21,000 is available. Deduction of goods returned of Rs. 2 lakhs is also available as the goods were returned within 6 months, even if returned after close of financial year. Thus, ‘Aggregate Sale Price’ will be Rs. 7, 79,000.
Thus, turnover and CST payable is as follows:
A
|
B
|
C
|
D
|
E
|
Product
|
Aggregate Sale price Rs
|
Sales tax Rate %
|
Turnover Rs
|
CST payable Rs
|
K
|
6,70,000
|
3%
|
6,50,485.44
|
19,514.56
|
K
|
7,79,000
|
8%
|
7,21,296.30
|
57,703.70
|
|
Total
|
|
13,71,781.74
|
77,218.26
|
Question:
In aforesaid example, if State Sales Tax for sale within State was 12.5% (instead of 8%), what will be the CST payable?
Answer:
CST rate for sale to unregistered dealer will be 12.5%. There is no difference in rate for sale to registered dealers.
Thus, the turnover and CST payable will be as follows:
Product
|
Aggregate Sale price Rs
|
Sales Tax rate
|
Turnover Rs
|
CST payable Rs
|
K
|
6,70,000
|
3%
|
6,50,485.44
|
19,514.56
|
K
|
7,79,000
|
12.5%
|
6,92,444.44
|
86,555.56
|
|
Total
|
|
13,42,929.88
|
1,06,070.12
|
Question:
In aforesaid example, if the local sales tax rate (i.e. for sale within State of Bihar) was 1%, what will be the CST payable?
Answer:
If the local sales tax rate is less than 3%, then that rate is applicable for Inter State sale also to registered dealers against C form. Same rate applies to sale to unregistered dealers also.
Thus, the turnover and CST payable will be as follows :
Product
|
Aggregate Sale price
|
Sales Tax rate
|
Turnover Rs
|
CST payable Rs
|
K
|
6,70,000
|
1%
|
6,63,366.34
|
6,633.66
|
K
|
7,79,000
|
1%
|
7,71,287.13
|
7,712.87
|
|
Total
|
|
14,34,653.47
|
14,346.53
|
Question:
In aforesaid example, if sales tax was fully exempt for the goods if sold in Bihar, what will be the CST payable?
Answer:
There will be no CST payable, whether sale is to registered dealer or unregistered dealer.
Question –
Gross inter-state sales of “DJ” Co. Ltd., Patna, Bihar, were Rs. 18,00,000 during 2007-08 (April 2007-March 2008). CST was not shown separately in invoices. Other information are as follows: (i) If product V is sold within State of Bihar, sales tax rate is 4%. (ii) Sales of Rs. 8 lakhs are inclusive of erection expenses of Rs. 1, 00,000, excise duty of Rs. 76,000 and packing charges of Rs. 25,000. The sale price is also inclusive of trade discount of Rs. 24,000, which has been later given by issuing a Credit Note. Buyers of these goods have issued form ‘C’ for these purchases. (iii) Balance sales of Rs. 10 lakhs are inclusive of excise duty of Rs. 95,000 and outward freight of Rs. 30,000. The freight was charged separately in Invoice. Buyers of these goods have not issued any declaration under Central Sales Tax Act. Out of these sales, goods of Rs. 2 lakhs were returned by customers. The goods were dispatched in February 07 and returned in June 07, i.e. after end of the accounting year. Find the turnover and CST payable.
Answer:
Since rate of tax is different for sale to registered dealers and un-registered dealers, we have to calculate ‘aggregate sale price’ separately.
(i) Where C form has been issued (i.e. buyer is a registered dealer and is eligible to buyer goods as per his Central Sales Tax Registration Certificate), the sales tax payable is 3%. Out of sales of Rs. 8 lakhs, deduction of erection charges of Rs. 1 lakh and trade discount of Rs. 24,000 is available. Thus, ‘Aggregate Sale Price’ is Rs. 6, 76,000. Sales tax is payable on excise duty and packing charges and hence no deduction is allowed on these accounts.
(ii) Where no C form is received (i.e. buyer is un-registered dealer), CST rate is 4%. Out of sale of Rs. 10 lakhs, deduction of freight of Rs. 30,000 is available. Deduction of goods returned of Rs. 2 lakhs is also available as the goods were returned within 6 months. Thus, ‘Aggregate Sale Price’ will be Rs. 7, 70,000.
Thus, turnover and CST payable is as follows:
A
|
B
|
C
|
D
|
E
|
Product
|
Aggregate Sale price Rs
|
Sales tax Rate %
|
Turnover Rs
|
CST payable Rs
|
V
|
6,76,000
|
3%
|
6,56,310.68
|
19,689.32
|
V
|
7,70,000
|
4%
|
7,40,384.62
|
29,615.38
|
|
Total
|
|
13,96,695.30
|
49,304.70
|
Question –
The following items relating to inter-State sales have been recorded separately in the books of account of Nathan & Co., dealer in CST: (Rs. In ‘000) (i) Sales as per bills (excluding CST) – 1,420 (ii) Excise Duty – 80 (iii) Labor charges for packing goods – 18 (iv) Insurance charges incurred by Nathan & Co. for goods transported (charged separately in invoices) – 20 (v) Freight charges incurred for moving goods from factory to depot – 45 (vi) Freight charges incurred from depot to buyers (incidental to sale) – 25 (vii) Design charges incurred for manufacturing goods as per buyer’s design – 5. - - You are required to compute the taxable turnover of Nathan & Co. and the CST payable. Brief treatment of each item should be given.
Answer–
The dealer is making sale from depot. Hence, freight charges from depot to buyer will not be allowed as deduction. In absence of any information, it is presumed that these have not been charged separately in invoice and hence there is no question of deduction from sale price (If these were charged separately, these would be includible in ‘turnover’).
Freight charges from depot to buyer are allowable as deduction if shown separately in invoice. It is presumed that these have been charged separately in invoice.
Excise duty, packing charges and design chares are includible in turnover. Insurance charges are not includible.
Hence turnover = 1420 + 80 + 18 + 5 = 1,523 i.e. Rs 15, 23,000. CST @ 2% would be Rs 30,460.
Question –
Ram & Co., a registered dealer with head office at Kolkata, furnishes to you the following information – (i) Inter-State sale of goods (it includes Rs. 10,00,000 being the value of goodstransferred to Chennai Branch covered by Form F) – Rs 49,20,000 (ii) Dharmada collected – Rs 25,000 (iii) Weighment dues charged separately from buyers 2,15,000 (iv) Cash discount shown in invoice as per trade practice – Rs 60,000 (v) Indemnity charges (recovered from buyers to cover transit loss based on their request) – Rs 53,000 - - Calculate the turnover and CST payable, on the assumption that all the sales were made to registered dealers
Answer–
CST is not payable on stock transfer. Hence, sales tax is payable on Rs 39,20,000 plus Dharrmada Rs 25,000 plus weighment dues Rs 2,15,000. Cash discount is allowable as deduction. Indemnity charges are in nature of insurance charges and hence allowable as deduction.
Thus, ‘turnover’ = 39,20,000 + 25,000 + 2,15,000 – 60,000 – 53,000 = Rs 40,47,000. CST @ 2% of Rs 40,47,000 would be Rs 80,940.
It is assumed that price given is exclusive of CST.
|