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What is Sale in Transit Transaction and what are the forms issued and get form parties?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kruthika asked over 2 years ago

Hi May I know, What is Sale in Transit Transaction and what are the forms issued and get form parties?

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered about 2 years ago

X Co.in Maharastra place order to Y Co in Kerala for a material and Y Co.in Kerala Place order for that material to Z Co. in Chennai and inform to supply directly to X in Maharashtra .Here X is purchaser of Y and Y is the purchaser of Z and Y asking Z to give the ownersp of material to X insted of Y.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

-- Please see the example given below: --X Co.in Maharashtra place order to Y Co in Kerala for a material and Y Co.in Kerala Place order for that material to Z Co. in Chennai and inform to supply directly to X in Maharashtra . --Here X is purchaser of Y and Y is the purchaser of Z and Y asking Z to give the ownership of material to X instead of Y.This is sale in transit.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 jitendra etikala answered over 2 years ago

Section 3(a) of CST Act,1956 defines the interstate sale/purchase transaction. Section 3(b) defines the interstate sale effected by transfer of documents of title to goods. When the goods are in movement from one State to other. The whole section 3 reads as under: “3. When is a sale or purchase of goods said to take place in the course of inter-state trade or commerce — A sale or, purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase — occasion the movement of goods from one State to another; or is effected by a transfer of documents of title to the goods during their movement from one State to another…” Section 6(2) of CST Act gives exemption to subsequent interstate sale effected by transfer of documents of title to goods when the goods are in movement from one state to another. However such exemption to subsequent inter-state sale is subject to production of Form E-I, as obtained from prior vendor and ‘C’ form from buyer. A simple example can be that, suppose A of Mumbai has sold goods to B of Ahmedabad. The goods are dispatched by lorry and L.R. is taken out by A (Mumbai) where in A is consignor and B (Ahmedabad) is consignee. If before taking delivery from transporter, B decides to sell his goods to ‘C’ of M.P., he can simply endorse the L.R. in name of ‘C’ and the sale will be complete. This is the second or subsequent interstate sale in the course of same movement. In this case A must have charged 4% CST in his bill. Being a second interstate sale effected by B to C, B is equally liable to pay CST on above transaction. However the intention of Government is not to levy multiple taxes on sale taking place in one course of movement. Therefore the subsequent sale is given exemption. However it is subject to production of given forms. In above example, the sale by B to C will be exempt if B produces before his assessing authority Form EI issued by A of Mumbai and Form ‘C’ issued by C of M. P. In light of above it is clear that the sale effected by transfer of documents of title to goods is eligible for exemption u/s. 6(2). These exempted sales are also referred to as “Sale in transit”.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

Dear Friend, -- Please see the example given below: --X Co.in Maharashtra place order to Y Co in Kerala for a material and Y Co.in Kerala Place order for that material to Z Co. in Chennai and inform to supply directly to X in Maharashtra . --Here X is purchaser of Y and Y is the purchaser of Z and Y asking Z to give the ownership of material to X instead of Y.This is sale in transit. --Here Cosigner is Z and Consignee is X.Here other than C form there is E-i and E-11 form also.Y purchaser of Z will give C form to Z in exchange of E-1 and Y the seller of X will get C form from X the purchaser.if X sells that material to A in Maharashtra and give A E-II form and should charge 0% tax. --This is to avoid double taxation.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

**For example:** X Co.in Maharastra place order to Y Co in Kerala for a material and Y Co.in Kerala Place order for that material to Z Co. in Chennai and inform to supply directly to X in Maharashtra .Here X is purchaser of Y and Y is the purchaser of Z and Y asking Z to give the ownersp of material to X insted of Y.Thais is sale in transit.Here Consiner is Z and Consinee is X.Here other than C form there is E-i and E-11 form also.Y purchaser of Z will give C form to Z in exchange of E-1 and Y the seller of X will get C form from X the purchaser.if X sells that matrl to A in Maharashtra and give A E-II form and should charge 0% tax.this is to avoid double taxation.

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