Q.1 ‘C’ Form

From 1st October, 2005 the rules for C forms and other declarations are changed. The ‘C’ forms are required for each quarter. Many times it so happens that vendor dispatches goods in one quarter and prepares invoice for the same. However the purchaser enters the said invoice in his purchase register in subsequent quarter. The purchaser includes above invoice in the ‘C’ form issued for such subsequent quarter. Whether such ‘C’ form is valid?

Ans. It is necessary to note that the vendor is required to produce ‘C’ form for claiming concessional rate for his sales. His sale should be supported by valid ‘C’ form. Therefore if he has effected sale in particular quarter the ‘C’ form should also be of said quarter. Inclusion of invoice in ‘C’ form of subsequent quarter will not be valid ‘C’ form for sale of previous quarter.

If the ‘C’ form is to be received as per purchaser’s accounting then it will also be practically impossible to verify the validity of such ‘C’ form. At what point of time purchaser records it will not be known to assessing authority of vendor and hence validity cannot be checked. Therefore practically also no such system is possible. Therefore in my view ‘C’ form should be as per invoice date of vendor.

Q.2 Inter-State job work and Form F

A dealer dispatches raw material goods to his job worker in other states, who is an independent job worker. The job worker carries out job work on the said materials as per requirement of the dispatching dealer. He charges job work charges to such dealer. Whether the dealer dispatching the goods to job worker is required to obtain ‘F’ form from the job worker? Also on receipt of goods back from job worker whether the dealer is liable to issue ‘F’ form to job worker?

Ans. As per section 6A of CST Act,1956 if the dealer dispatches goods to his branch outside the State or place of agent etc., otherwise then due to sale, then the dealer so dispatching the goods is liable to collect ‘F’ form from such branch or agent etc. However when the goods are dispatched to independent job worker it cannot be said to be a dispatch to his branch/agent etc.. The relationship is on principal to principal basis. There is no requirement for ‘F’ form in such circumstances. Therefore at no point of time ‘F’ form is required. Recently the Commissioner of Sales Tax, Maharashtra State has issued circular No.16T of 2007 dated 20-2-2007 in which also the above position is explained.

Q.3 Deemed exports and Form H

By insertion of section 5(4) in CST Act, 1956 the production of H form is made mandatory for claiming exempted sale as deemed export u/s.5(3) of CST Act,1956. If only H form as issued by purchaser is produced, whether the claim will stand allowed or whether the vendor will still be required to produce export order and bill of lading copy etc.?

Ans. The issue is required to be seen in the light of the provisions of section 5(3) and 5(4). The section 5(3) remains as it is and hence the requirements of that section are required to be fulfilled. This means that production of export order copy and B/L is still necessary. In addition to above as per section 5(4) production of H form is necessary. Section 5(4) is in support of section 5(3), though mandatory. It is not independent section granting any exemption. Hence as stated above the requirement of other details will continue.

Q.4 Despatch by job workers out of States and Form ‘C’

A dealer is registered in Maharashtra. He has purchased goods from Maharashtra Dealer and asked him to dispatch the said goods to his job worker in Gujarat. The Maharashtra dealer has issued ‘C’ form to Maharashtra Vendor but the assessing authority of the Maharashtra vendor is objecting to said ‘C’ form on the ground that it is from same state. Whether the ‘C’ form is invalid?

Ans. The answer to above query lies in Rule 12(6) of CST (R & T) Rules,1957. The said Rule provides that if the purchasing dealer is not registered in the State where the delivery is given then the purchasing dealer can issue ‘C’ form from the State where he is registered. In given case it is uncontroverted fact that the sale is interstate sale, since, due to sale by vendor in Maharashtra the goods move to other state. Since the purchasing dealer is not registered in Gujarat, where delivery is given, the purchasing dealer is entitled to issue ‘C’ form of Maharashtra. The assessing authority is not justified in rejecting claim.

Q.5 Registration and CST Act

A dealer is intending to do business and wishes to effect interstate purchase on ‘C’ form. However he is not registered under the Local Act nor he has effected any turnover for getting himself registered under CST Act, 1956. Whether the dealer can apply for registration on the ground that he intending to do business and therefore requires registration?

Ans. The registration under CST Act is granted either u/s.7(1) or 7(2). Since the dealer is not registered under Local Act he can not get registration u/s.7(2) of the CST Act. However section 7(1) says that any dealer liable to pay tax should apply for registration. There is no threshhold limit for becoming liable. Also there are various provisions where only registered dealer can take benefit like, issue of ‘C’ form etc.. Looking from above angle, in my opinion, even the dealer intending to do business, but not done any turnover, can also apply for registration. An useful reference can be made to the judgment of Hon.Madras High Court in Venketeshwara Commercials & Plastics (P) Ltd. vs. State of T.N. (35 STC 598)(Mad) wherein the High Court has observed as under.

“We are unable to understand this arguments of the learned counsel. There could not be any two commencements of the same business, one for the purpose of the Companies Act and the other for the purpose of the Central Sales Tax Act. What the learned counsel for the revenue means by saying so is that unless at least one transaction of sale is effected, there is no commencement. We cannot agree. A dealer can be going on purchasing and he may not be liable to pay tax. Still, he would have commenced business. That is what has happened in this case. The petitioner has purchased machinery from outside dealers. The reasoning of the Board that unless a person actually becomes ‘liable to pay tax’ under the Central Sales Tax Act, he could not apply for registration is not also acceptable. It is seen from section 7(1) and 10A that every dealer liable to pay tax under the Act shall make an application for registration to such authority as may be prescribed, and if he is not a registered dealer, he is liable for prosecution. In effect, it requires that no dealer shall carry on business in interstate sales or purchases unless be is a registered dealer. It necessarily follows that he must be entitled to apply for and get himself registered even before he enters into transactions of purchase and sale in interstate sales. We are, therefore, unable to agree that the petitioner, in order to be entitled for registration, should have actually commenced business in the sense of already entered into a transaction of sales or purchase before he applied for registration.”