TAXES

 DIRECT TAX  INDIRECT TAXES

 INCOME TAX  CENTRAL EXCISE

 WEALTH TAX  CENTRAL SALES
TAX
 CUSTOMS DUTY
 SERVICE TAX
 OCTROI ETC.

CENTRAL SALES TAX 1

CENTRAL GOVERNMENT

 INCOME TAXES(EXCEPT ON
AGRICULTURE)
 CUSTOMS DUTY
 EXCISE DUTY (EXCEPT ON LIQUOR)

2007 dec CENTRAL SALES TAX 2

STATE GOVERNMENT

 TAX ON AGRICULTURE
 EXCISE ON LIQUOR
 BOTH CST AND LST

2007 dec CENTRAL SALES TAX 3

LOCAL AUTORITIES

 OCTROI
 MUNICIPAL TAXES
 TAXES ON HOUSE PROPERTY

2007 dec CENTRAL SALES TAX 4

INDIRECT TAXES

 CENTRAL EXCISE
 CENTRAL SALES TAX
 CUSTOMS DUTY
 SERVICE TAX
 OCTROI ETC.

2007 dec CENTRAL SALES TAX 5

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

2007 dec CENTRAL SALES TAX 6

 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
 essential ingredients of interstate sale.doc

2007 dec CENTRAL SALES TAX 7

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

2007 dec CENTRAL SALES TAX 8

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)
2007 dec CENTRAL SALES TAX 9
REGISTERED DEALER SEC7

 A PERSON SHOULD REGISTER

HIMSELF U/S7
THE REGISTRATION MAY
BE

1)VOLUNTARY REGISTRATION OR
2)COMPULSORY REGISTRATION,

2007 dec CENTRAL SALES TAX 10

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

2007 dec CENTRAL SALES TAX 11

POINTS TO BE REMEMBERED

 THE PROFIT MOTIVE IS NOT

COMPULSORY FOR THE SALES TAX
PURPOSE

 THE TAX IS LEVIED ON SALES NOT

ON PROFIT

2007 dec CENTRAL SALES TAX 12

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 .

2007 dec CENTRAL SALES TAX 13

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.

2007 dec CENTRAL SALES TAX 14

GOODS-2(d)

 GOODS MEANS ANY ARTICLE ,THING,

COMMODITY,AND WHICH IS
MOVABLE ,HOWEVER GOODS DOES
NOT INCLUDE
 NEWSPAPERS,ACTIONABLE
CLAIMS,STOCKS, SHARES,
SECURITIES.

2007 dec CENTRAL SALES TAX 15

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.

2007 dec CENTRAL SALES TAX 16

FEW EXAMPLES OF SALE
 SALE OF STEAM,CANNED SOFT WARE,
 ELECTRICAL ENERGY
 ANIMALS AND BIRDS,
 UPROOTED TREES,
 SECOND HAND GOODS,
 REGECTED GOODS,
 SIM CARD,
 TRADE MARK,
 LOTTERY TICKETS.

2007 dec CENTRAL SALES TAX 17

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 CENTRAL SALES TAX 18

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.

2007 dec CENTRAL SALES TAX 19

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.

2007 dec CENTRAL SALES TAX 20

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

2007 dec CENTRAL SALES TAX 21

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 22

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.

2007 dec CENTRAL SALES TAX 23

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 CENTRAL SALES TAX 24

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 CENTRAL SALES TAX 25

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 CENTRAL SALES TAX 26

For Registered Buyers

 LOCAL SALES TAX RATE OR 3%

WHICH EVER IS LESS
 IF LST IS NIL –CST WILL BE NIL
 IF LST IS < 4%-THEN CST WILL BE
SAME
 IF LST IS >= THAN 4%-THEN CST
WILL BE 3%.

2007 dec CENTRAL SALES TAX 27

FOR UNREGISTERED BUYER

 Same as LST

 Sale to Government will be

equivalent to sale to unregistered
dealer w.e.f. 1-4-2007
 CST rate at a glance.doc

2007 dec CENTRAL SALES TAX 28

question

 A DEALER IN PUNJAB MADE INTER

STATE SALE OF GOODS
R,T,V,X,Y,Z.SALES TAX RATES AS
PER PUNJAB SALES TAX ACT FOR
SALE WITHIN STATE IS NIL,
2%,4,6,8,AND 12%.WHAT IS THE
SALES TAX RATE APPLICABLE IF
DEALERS WHO ISSUED ( C ) FORM, (
D) FORM ,NO FORM.
2007 dec CENTRAL SALES TAX 29
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.

2007 dec CENTRAL SALES TAX 30

FORMULA

 TURNOVER = 100*SALEPRICE
. 100 +RATE.

 TAX PAYABLE= SALEPRICE *RATE

. 100 +RATE.

2007 dec CENTRAL SALES TAX 31

PROBLEM

 AGGREGATE SALE PRICE DURING

JULY TO SEPTEMBER 2007 WAS RS
10400 IN INTER STATE SALE FROM
HARYANA.IF THE GOODS ARE SOLD
WITHIN THE STATE OF HARYANA,
SALES TAX RATE IS 7% .BUYER FROM
DELHI ISSUED DECLARATION IN
FORM C. WHAT IS TURNOVER AND
TAX PAYABLE.
2007 dec CENTRAL SALES TAX 32
PROBLEM
 Aggregate Sale Price During October
To December Was Rs 11000, In Inter
State Sale From Gujarath, If The
Goods Are Sold Within The State Of
Gujarath Sales Tax Rate Is 7% ,Buyer
From Chennai Did Not Issue Any
Sales Tax Declaration. What Is Turn
Over And Tax Payable.

2007 dec CENTRAL SALES TAX 33

 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.

2007 dec CENTRAL SALES TAX 34

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)

2007 dec CENTRAL SALES TAX 35

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.

2007 dec CENTRAL SALES TAX 36

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.
2007 dec CENTRAL SALES TAX 37
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.

2007 dec CENTRAL SALES TAX 38

PROBLEM

A dealer effected following sales during

January-March, 2007 quarter - (i) Invoice
No. 65 for Rs. 1,76,800. (inclusive of tax)
(ii) Invoice No. 66 for Rs. 1,25,000 plus tax
@ 4% (iii) Invoice No. 67, for Rs. 40,000.
plus C.S.T. @ 4% - Rs. 1,600. Goods
worth Rs. 10,400 (inclusive of taxes) were
returned within 6 months. Calculate the
turnover and sales tax payable, if rate of
tax is 4%. (ICWA Inter)
2007 dec CENTRAL SALES TAX 39
A dealer effected the following sales during (April to June)

Invoice dt 2.4.97 for Rs 26,000 + tax @ 4%

dt 19.4.97 for Rs 70,000 + tax @ 4%
dt 2.5.97 for Rs 52,000 (incl of tax)
dt 4.6.97 for Rs 12,200 + tax @ 4%.
dt 25.6.97 for Rs 20,000 + tax @ 4%.
Goods worth Rs 6,100 (exclusive of tax) were
returned on 28.6.1997 ( sale date 4.6.97)
Goods worth Rs 5,200 (inclusive of tax) sold on
25.12.1996 were returned on 30.6.1997..
Calculate the turnover and sales tax payable if the
rate of tax is 4%. (ICWA – Inter)
 SOLUTION

Aggregate sale price (which is

inclusive of CST) is total of five
invoices less sales return within six
months. Hence, aggregate sale price is
(i) Rs 27,040 + (ii) Rs 72,800 + (iii) Rs
52,000 (iv) Rs 12,688 (v) 20,800 Less
(vi) Sale Return Rs 6,344. Hence,
aggregate sale price is Rs 1,78,984.
2007 dec CENTRAL SALES TAX 41
From the following details, compute the central
sales-tax payable by a dealer carrying on business
in New Delhi : Gross Turnover – Rs 16,00,000.
Other details - i) Trade commission for which
credit notes have to be issued separately - 48,000
ii) Installation charges - 25,000 iii) Excise duty -
80,000 iv) Freight, insurance and transport charges
recovered separately in the invoices - 60,000 v)
Goods returned by dealers within six months of
sale, but after the end of financial year - 40,000 vi)
Central Sales-tax. - Buyers have issued ‘C’ forms
for all purchases. (CA Inter)
How would you arrive at taxable turnover
under the Central Sales Tax Act, 1956 from
the following particulars : (i) Gross sales as
per accounts : Rs. 10,00,000. (ii) Gross sales
include : (a) Rs. 50,000 being trade discount
allowed to wholesale dealers in terms of
agreement. (b) Rs. 20,000 being quantity
discount allowed to buyers on the basis of off-
take in a specified period. (c) Rs. 70,000
being excise duty paid on goods but
recovered from customers by charging the
same in invoices. (iii) No sales tax is included
in gross sales
.(iv) Gross sales figures are net of sales
returns detailed below : (a) Goods worth Rs.
25,000 received back after the expiry of six
months from the date of sale as the customer
rejected the goods not found in accordance
with the order. (b) Goods worth Rs. 40,000
returned by the buyers after six months
because of inability to the price. (v) A sum of
Rs. 75,000 has been recovered from the
customers towards freight which has been
separately charged in the invoices. The
amount of freight is not included in gross sales
.(c a ).
SOLUTION

Hence, taxable turnover is Rs

10,00,000– Rs 50,000 (trade
discount) – Rs 20,000
quantity discount + Rs 40,000
(Goods returned after 6
months added back) i.e. Rs
9,70,000/-.
2007 dec CENTRAL SALES TAX 45
M/s Roy Brothers, Kolkata, West
Bengal, are dealing in two products
namely X and Y. The gross Inter State
Sales are Rs. 8 lakhs and Rs. 10 lakhs
respectively during 04-05. CST was not
charged in the Invoice. If the products X
and Y are sold within State of West
Bengal, the sales tax rate is 8% and 4%
respectively. Other information in
respect of the year is as follows :
( a) Product X is not manufactured in India. It is
imported. Product ‘Y’ is ‘declared goods’, included
under section 14 of CST Act.
(b) Out of sale of product X, goods worth Rs. 2.50
lakhs were rejected by customer. The goods were
dispatched in December 95 and returned by
customer in October 96 as these were not to the
specification.
(c) In case of sale of Rs. 2 lakhs of X, goods were
imported by Roy Brothers. These were unloaded in
Kolkata port. Before goods were cleared from
customs, they were sold by transfer of documents to
a buyer in UP. Customs duty was paid by the buyer
from UP
 d) D form was received in respect of balance sales
of ‘X’. The sales price is inclusive of packing charges
of Rs. 10,000, shown separately in Invoice.
(e) Out of total sales of Y, sales of Rs. 6 lakhs were
inclusive of packing charges of Rs. 15,000, transport
charges of Rs. 12,000 and transit insurance charges
of Rs. 6,000. These charges were separately shown
in Invoice. C form was received in respect of the
sales. These goods were purchased by Roy
Brothers from a manufacturer in West Bengal for Rs.
4,57,600, which included West Bengal State sales
tax of Rs. 17,600
(f) Balance sale of ‘Y’ was to unregistered dealers.
A cash discount of Rs. 20,000 was given to buyers
in respect of the sale. Roy Brothers had introduced
a scheme of additional discount to those who effect
sales more than 10% of their sales of previous year.
Such additional discount amounted to Rs. 25,000
during the year on these sales. The sale of Rs. 4
lakhs is without considering these discounts of Rs.
20,000 and Rs. 25,000. These goods were
purchased by Roy Brothers from a manufacturer in
West Bengal for Rs. 2,99,200, which included local
sales tax of Rs. 11,800.
SOLUTION
In case of ‘X’, the position is as follows – (i) Time limit
of 6 months is not applicable to rejected goods. Hence,
deduction of Rs 2.50 lakhs is permissible. (b) If the
goods are sold before crossing of customs barrier, it
will be a sale during import and hence no sales tax is
payable. Thus, aggregate sale price of ‘X’ for tax
purposes is Rs 3.50 lakhs (out of total sale of Rs 8
lakhs). Since D form is received, CST @ 4% is
payable. Hence, turnover is Rs 3,36,538.46 and CST
payable is Rs13,461.54
2)In case of sale of ‘Y’ of Rs 6 lakhs,
deduction of transport charges of Rs 12,000
and transit insurance charges of Rs 6,000 is
permissible. Thus, aggregate sale price of ‘Y’
for tax purposes is Rs 5,82,000 (out of total
sale of Rs 6 lakhs). Since C form is received,
CST @ 3% is payable. Hence, turnover is Rs
582000 and CST payable is Rs. 17460
In case of sale of ‘Y’ of Rs 4 lakhs, deduction of
cash discount of Rs 20,000 is permissible but
deduction of bonus discount is not permissible.
Thus, aggregate sale price of ‘Y’ for tax
purposes is Rs 3.80 lakhs (out of total sale of Rs
4 lakhs).
CST will be equal to 4%
Tax payable will be equal to 3.8 lacs * 4%
=15200
 Will Roy Brothers be able to obtain any
refund of tax paid on their purchases ?
If so, how much ?

If declared goods are sold inter-state,

refund of local tax paid on purchases is
permissible. Hence, Roy Brothers are
entitled to get refund of Rs 29,400/-
(Rs. 17,600
+11,800.)
2007 dec CENTRAL SALES TAX 53
(a) Sale of Rs. 2 lakhs were direct exports in their own
name.
(b) Sale of Rs. 5 lakhs were made to an exporter who
made direct sales.
(c) Sale of Rs. 3 lakhs were to Government agencies.
(d) Sale of Rs. 9 lakhs were to registered dealers.
(e) Sale of Rs. 4 lakhs were to unregistered dealers. If
the goods are sold within State of UP, local sales tax
rate is 8%.
State in each of aforesaid cases : (A) Sales tax
declaration form which should be obtained from the
buyers. (B) State in each case Central Sales Tax (CST)
rate applicable (a) If required declaration is received
and (b) If required declaration is not received.
FORMS TO BE ISSUED

FORM C - REGISTERED BUYER

FORM D - GOVERNMENT BUYER
FORM E1- SUBSEQUENT SALE
FORM E2- SUBSEQUENT SALE
FORM F - STOCK TRANSFER(DEPOT)
FORM H - SALE TO EXPORTER
FORM I - SALE TO SEZ
•Forms for Declarations.doc
2007 dec CENTRAL SALES TAX 55
SUBSEQUENT SALE

 IF SUBSEQUENT SALE IS MADE TO

REGISTERED AND GOVERNMENT
DEALER IT IS EXEMPTED(E1&E2)
 IF SUBSEQUENT SALE IS MADE TO
UNREGISTERED DEALER THEN IT IS
TAXABLE
 Subsequent Sales and transfer of title.do
c

2007 dec CENTRAL SALES TAX 56

THANK YOU

2007 dec CENTRAL SALES TAX 57