MEANING OF CENTRAL SALES TAX :-

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2 MEANING OF CENTRAL SALES TAX :- Central sales tax is an indirect tax which is imposed by the central government on taxable turnover of inter state sale of goods made by a registered dealer during the prescribed period in the course of business.

3 FEATURES OF CENTRAL SALES TAX :- The following are the features of central sales tax act, 1956 :- 1.Scope The central sales tax act extends to the whole of India. 2. Levied by Central Govt.-: The CST is leveied by the Central Govt. but it is collected by State Govt.from where goods have been sold. 3. No Exemeption Limit-: CST is levied on turnover and there is no exemption limit on turnover. 4. Administered by State Govt.-:The sales tax authorities of State Govt. are authorities for the purpose of CST.

4 5. Concessional Rates-: Concessional rates of CST is applicable if declaration in Form C is issued by purcahser who is a registered dealer. 6.Sales are exempted-: Certain sales are exempt under CST if-: a)sale is within state as it subject matter of VAT b)subsequent sale is there c)sale or purchase in the course of exports and imports. 7. Types of good under the act, goods have been divided into declared goods and other goods. On Declared goods CST is charged at the rate not more than 5% and not more than once,while tax charged on 0ther goods is Local State Sale tax.

5 Objectives of Central Sales Tax-: 1) To formulate the basis for determining when a sale or purchase of goods takes place in the course of interstate trade or outside state or in the course of import into and export from India. 2) To formulate rules for levy of tax, exemptions, collections of tax, penalties provisions, offences and penalties. 3)to specify the restrictions & conditions subject to which state laws impose taxes on the sale or purchase of goods of special importance. 4) To fix liabilities of persons for payment of Sales Tax.

6 NEXUS THEORY Nexus means connection or link in case, of any state has a connection with the sale transactions, the states is competent to impose tax on such transactions i.e. in case of inter-state sale, both ( Seller & Buyer) States used to levy tax. Thus, each State having a territorial nexus with the sale, used to levy tax, with the result same transaction has to suffer tax in different states which results into multiple taxation. The Law makers introduced 92A and amended Article 286 of constitution of India, imposing restrictions on state power to levy tax,on the following transactions : -: Inter State Sale/Purchase

7 -: Export Sale/Purchase -: Import Sale/Purchase -: Sale outside the state Thus Nexus theory has lost its relevance after amendments in the constitutions of India. The State Govt. can levy tax on local sale (intra state sale) only.

8 Definitions-: Section 2 Appropriate State-: (Sec.2A) Appropriate State means-: 1) in relation to a dealer who has one or more places of business situated in the same State, that state 2) in relation to a dealer who has places of business situated in different States, every such State with respect to the place or places of business situated within its territory.

9 Business [Sec. 2(aa)]-: Business Includes- 1) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not the same is carried on with a motive to make gain or profit and whether or not any gain or profit accrues and 2) any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern.

10 Dealer [Sec 2(b)] Dealer means any personwho carries on (whether regularly or otherwise ) the business of buying, selling, supplying or distributing goods, directly or indirectly for cash or for deffered payment or for commission remuneration or other valuable consideration and includes-: a) a local authority,a body corporate, a company, any cooperative society or other society, club,firm.huf or other association of persons which carries on such business. b) a factor, broker,commission agent del credere agent or any other mercantile agent by whatever name called and whether of same description as herein before mentioned or not who carries on the business of business of buying, selling, supplying or distributing goods belonging to any principal whether disclosed or not and

11 c) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whther the offerof intending purcahser is accepted by him or by the principal or nominee of the principal. The Following are not to be considered as dealer under the definition-: a) Agent securing orders only b) Kachha Aditya C) Student hostels D) Advertising agents E) Educational Socities F) Doctors dispensing medicines.

12 Deemed Dealer-: The term dealer includes deemed dealer also.every person who buys or sells goods on behalf of a dealer residing outside the state is termed as deemed dealer. Registered Dealer-: Every dealer liable to pay tax is to get himself registered under section 7 for the pupose of inter state sales. Declared Goods [Sec.2 (c)]- Declared goods means goods declared under section 14 to be of special importance in inter-state trade of commerce.

13 Goods [Sec.2 (d)] Goods includes all materials articles commodities and all other kinds of movable property but does not include newspapers, actionable claims, stocks, sahres and securities: Goods include following-: a) Standing Crops, grass and things attached to and forming part of land which is agreed to be severed (cut) before or under contract of sale and consequently liable to sales tax. b) Animals & Birds, old newspapers sold on weight basis,advance licenses under exim policy, gases, illegal goods like charas ganja etc.

14 C) Intangible as well therefore software/ copyright/ patents etc and thus chargeable to tax D) Goods inculde intangible or incorporeal movables. E) Air and water may be free goods but once these are made available these are made available to customer for cost will be treated as goods. F) sales of illegal goods like hashish, ganja also liable to tax. Goods exclude-: X-rays supplied by radiologist,amulets by spiritual consultant, medicines by say homeopathic doctor, Electricity.

15 Place of Business [Sec.2 (dd)] Place of business includes-: a) in any case where a dealer carries on business through an agent by (whatever name cxalled) the place of business of such agent B) a warehouse,godown, or other place where a dealer stores his goods C) a place where dealer keeps his books of account.

16 Sale [Sec.2 (g)] Sale with its grammatical variations and cognate expressions means any transfer of property in goods by one person to another for cash or deffered payment or for nay valuable consideration and includes: A) a transfer of property in any goods for cash,deffered payment or valuable consideration B)transfer of property in goods involved in execution of works contract C) a delivery of goods on hire purchase or any system of payment by installments D) a transfer of right to use any goods for any purpose for cash,deffered payment or other valuable consideration. E) a supply by way of or as a part of any service or in any manner whatsoever of goods being food or any other article of human consumption or any drink (whteher or not intoxicating) where such supply or service is for cash,deffered payment or other valuable consideration.

17 Sale Price [Sec.2 (h)] Means the amount payable to a dealer as consideration for the sale of any goods less any sum allowed as cash discount according to practice normally 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 the cost of frieght or delivery or cost of installation where such cost is separately charged.

18 YEAR [SECTION 2(K) It means the year applicable in relation to a dealer under the general sales tax law of the appropriate state, and if, there is no such year applicable, it is the financial year.

19 TURNOVER [SECTION 2 (J)] It is the aggregate of the sale prices received and receivable by the dealer in respect of sales of any goods in the course of inter-state trade or commerce made during a prescribed period. Prescribed period is the period in which sales tax return is filed.