Liability of local tax, VAT + CST

[A RAVINDRA]

X is a selling agent in Karnataka for Y who is a manufacturer in Karnataka. X procures an order from Z in Tamilnadu and informs Y to raise the invoice in the name of X and mention consignee as Z for the order so procured. Y prepares an invoice on X and consignee as Z and send the material directly to Z in tamilnadu attaching one more invoice raised by X on Z with 2% CST against form C. Y has not charged sales tax in his invoice to X (consignee as Z) The said transaction is done taking the benefit of section 8 & 6 of CST Act. I would like to know whether the said transaction is in order and as per section 8 of CST Act. Will there be any liability of local tax to Y in the said transaction. Please clarify

Posts / Replies

[Surender Gupta]

It is a interstate sale and not subject to local sales tax / VAT.

[sunil gupta]

As per my view transaction from Y to X will be a Local sale which is liable for Local VAT. The transaction between X & Z is an interstate sale.The benefit of sec. 8 & 6 of CST Act will not be available.Please refer to decision in case of Indus Steel & Alloys Ltd Vs. State of Tamilnadu and others Reported at (2008) 18 VST 546 ( CSTAA)