P E S Institute of Technology
Department of MBA 100 Feet Ring Road, BSK III Stage, Bangalore – 560 085
A TERM PAPER On
Submitted in fulfillment of the requirements for the 4th SEM MBA TAX MANAGEMENT
Submitted to: PROF. SHARMA DEPARTMENT OF MBA
Submitted by: SOUJANYA.N 1PB11MBA31
where such supply or service. (vi) A supply. deferred
. Imposition of tax became effective from 01. by way of or as part of any service or in any other manner whatsoever. at that time the parliament was not empowered to levy any type of sales tax.12. (v) A supply of goods by any unincorporated association or body of persons to a member thereof for cash. which takes place within the state.INTRODUCTION
According to the article 265 of the constitution of India no tax of any nature can be levied or collected by the central or State Governments except by the authority of law. There for central sales tax Act 1956 was enacted by the Parliament and received the assent of the president on 21. being food or any other article for human consumption or any drink (whether or not Intoxicating). (ii) A transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract.1957. gave power to the state legislature to levy sales tax on sale or purchase of goods other than newspapers. deferred payment or other valuable consideration. and include -(i) A transfer. Sale The term `Sale’ is defined in Section 2(g) as given below: “Sale with its grammatical variations and cognate expressions means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration.1956. (iv) A transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash. of goods. 1. of property in any goods for cash. is for cash. otherwise than in pursuance of a contract. However. As a result. Therefore. Although. deferred payment or other valuable consideration. The constitution of India vide entry no. same goods came to be taxed by several states on the ground that one or more ingredient of sale was present in their state. (iii) A delivery of goods on hire purchase or any system of payment by instalments. This led to multiple levy of tax. only state legislature enacted state sales tax laws in their respective state for levy of sales tax on sale or purchase of goods other than newspapers. the State Government were empowered to levy and collect tax on sales made within its own territory but there was no specific provisions of levying tax on sale and purchase having interstate composition. 54 of the state list. deferred payment or other valuable consideration.07.
However. directly or indirectly. (ii) a factor. by whatever name called. supplying or distributing goods. goods belonging to any principal whether disclosed or not. Sale price is the amount payable to the seller by the buyer. Sale Price “Sale Price” means the amount payable to a dealer as consideration for the sale of any goods. the following deductions will be allowed from the above sale price: 3. Declared goods means goods declared under section 14 to be of special importance in interState trade or commerce. remuneration or other valuable consideration. or for commission. commodities and all other kinds of movable property. Dealer means any person who carries on (whether regularly or otherwise) the business of buying. broker. who carries on the business of buying. or for deferred payment. any cooperative society or other society. and includes(i) a local authority. and whether of the same description as hereinbefore mentioned or not.payment or other valuable consideration. but does not include a mortgage or hypothecation of or a charge or pledge on goods “. Hindu undivided family or other association of persons which carries on such business. 6. or any other mercantile agent. (b) Any sum charged for anything done by the seller in respect of the goods at the time of or before the delivery thereof. Goods includes all materials. but does not include newspapers. club. for cash. del credere agent. stocks. selling. actionable claims. commission agent. articles. less any sum allowed as cash discount according to the practice in the trade. a body corporate. 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 freight or delivery or the cost of installation in cases where such cost is separately charged [2(h)]. firm. shares and securities. 5. a company. 4. which includes the following: (a) Consideration for the sale of any goods. whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal. selling. Place of business includes –
2. supplying or distributing. and (iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal.
fitting out. repair or commissioning of any movable or immovable property. Turnover used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period and determined in accordance with the provisions of this Act and the rules made there under.(i)
In any case where a dealer carries on business through an agent (by whatever name called). improvement.
Formulation of Principles for determining when a Sale or Purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of Import or Export
When is a sale or purchase of goods said to take place in the course of interState 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 purchasea. 10. Registered dealer means a dealer who is registered under section 7. 12. and “general sales tax law” means any law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally and includes value added tax law. installation. altering. 8. occasions the movement of goods from one State to another. Year in relation to a dealer means the year applicable in relation to him under the general sales tax law of the appropriate State.
a warehouse. or
. Works contract means a contract for carrying out any work which includes assembling. processing. Prescribed means prescribed by rules made under this Act. building. go down or other place where a dealer stores his goods. and a place where a dealer keeps his books of account. the place of business of such agent. erection. fabricating. the financial year. 11. 9. construction.
7. and where there is no such year applicable. manufacturing. Sales tax law means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf and includes value added tax law.
if such last sale or purchase took place after. if the goods are within the State (a) In the case of specific or ascertained goods. A sale or purchase of goods shall be deemed to take place inside a State. II. at the time the contract of sale is made and (b) In the case of unascertained or future goods. A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.b. When is a sale or purchase of goods said to take place in the course of import or export I. Notwithstanding anything contained in sub-section (1). the agreement or order for or in relation to such export. Notwithstanding anything contained in sub-section (1).
. III. at the time of their appropriation to the contract of sale by the seller or by the buyer. if any designated Indian carrier purchases Aviation Turbine Fuel for the purposes of its international flight. and was for the purpose of complying with. When is a sale or purchase of goods said to take place outside a State Subject to the provisions contained in section 3. A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasion such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. whether assent of the other party is prior or subsequent to such appropriation. when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State. such sale or purchase shall be deemed to have taken place outside all other States. The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority. the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export. IV. Is effected by a transfer of documents of title to the goods during their movement from one State to another. V.
V. II. Central Govt has authority to decide the rate of duty on Goods. Other Goods
Features of Central Sales Tax:
I. Scope Levied by Central Govt Administered by State Govt Concessional Rates: If declaration in form C by registered purchasing dealer Sales are exempt: a) Sale within the State b) Subsequent Sale c) Sale outside the territory of India VI.such purchase shall be deemed to take place in the course of the export of goods out of the territory of India. Assessment is done by State Govt and all revenue are given to state of seller. Collection. It came into existence on 5th Jan.
Meaning Of Sales Tax:
The Sales Tax is levied at the time when sale or purchase of goods takes place. Administration. Declared Goods b. IV. Categories of Goods a.
INTER [from one state to another]
INTRA [within one state and its territories called VAT]
Central Sales Tax
It is an Indirect Tax as the burden falls on the consumer. In sales tax the first burden is on the dealer and the incidence of tax is on the consumer. 1957 and applicable from this very date. Appeals. It is an indirect tax. It is levied by Central Govt on taxable turnover of Inter-state sale of goods made by registered dealer in ordinary course of business.
supply or distribution of unserviceable or old stores or waste products or accessories. Sale must be of goods defined under CST Act
WHEN A GOVERNMENT CAN BE TREATED AS A DEALER Government Departments like railways. buys. Sale should take place in the course of inter-state trade or commerce e. whether or not in the course of business. He must carry on any business d. He should be a Registered Dealer under CST c. EXCEPTION The Exception is sale. VIII. PWD etc which. directly or otherwise for cash or for deferred payment or other valuable consideration shall be a dealer. supplies or distributes goods. post.VII.
Principles of Central Sales Tax
Sale in course of Import/Export
Intra state sale
INTER STATE SALE:
Inter State Sale
Occasions the Movement of Good Sec
Effected by transfer of Documents of Title to the Goods Sec
Registration of Seller is necessary Liability to pay Central Sales tax
APPLICABILITY OF CST ACT
CST IS APPLICABLE ONLY WHEN FOLLOWING CONDITIONS ARE SATISFIED a. There should be a Dealer b. sells.
Basic Requirements Are: There must be movement of goods from one State to another before any contract of sale or agreement to sell has been made. b) There must be physical movement of goods from one Stare to another.[AS PER SECTION 3(a)] THE BASIC REQUIREMENTS ARE: a) The transaction must be a complete sale.
As the sale is inside the state of Delhi.
SALE BY TRANSFER OF DOCUMENTS OF TITLE OF GOODS [AS PER SECTION 3(b). There must be a sale by the transfer of documents of title. therefore no sales tax on the same. COMMENTS Transfer from Punjab to depot in Delhi is purely a stock transfer .
. Such transfer of title documents must take place while the goods are still in movement or transit
INTRA STATE SALE
Transferred goods to his depot Goods were sold from the depot to the buyers in Delhi.
Sale from depot to customers is a local sale and termed as sale inside state of Delhi.IF THE SALE OCCASIONS MOVEMENT OF GOODS FROM ONE STATE TO ANOTHER. the goods were transferred from the factory to the depot and the depot accordingly delivered the same to B. it automatically becomes outside all other states. Example STATE X STATE Y
B placed an order with the depot of A Depot was not having ready availability of the stock Therefore and thereafter.
That the sale must be a part or parcel of the export
SALE IN COURSE OF IMPORT
Sale/purchase between A & B is import sale under sec 5(2)(a) Sale/purchase between B & C also qualify as import sale u/s 5(2)(b) as goods are sold by way of transfer of documents of title to goods.SALE IN COURSE OF IMPORT/EXPORT
Sale in course of Import/Export
Sale in Course of Export
Penultimate Sale in the Course of Export
Sale in course of Import
SALE IN THE COURSE OF EXPORT Three essentials are: That there must be a sale.
. No sales tax chargeable on sale in the course of import. Those goods must actually be exported.
Sales Tax in India is that form of tax which is imposed by the government on sale/purchase of a particular commodity within the country. Sales tax is to be paid to the Sale authority of the State from which the movement of the commodities starts or commence. Thus sales tax plays a major role in acting as a major generator of revenue of the various State Government. certain states also impose extra charges such as work contracts tax. and purchaser tax. subject to the condition that the penultimate sale is: For purpose of complying with agreement or order in relation to export Such sale is made after the agreement or order in relation to export Same goods which are sold in penultimate sale should be exported. Normally. It is imposed under Central Government [Central Sales Tax] and the State Government [Sales Tax] Legislation. each state had its own sales tax and levies the tax at various rates.Penultimate Sale in the Course of Export:
Last sale or purchase of goods preceding the sale/purchase occasioning the export of those goods out of territory of India shall also be deemed to be in the course of such export. we see that Sales tax is to be paid by every dealer when he sells any commodity. irrespective of the fact that there may be no liability to pay tax on such a sale of goods under the tax laws of the appropriate state.
. turnover tax. Apart from sales tax. during interstate trade or commerce. Hence.
Indirect Tax Laws: By Sareen And Sharma Conceptual Approach Toindirect Tax: By Neeraj Mariya Indirect Taxation: By V Balachandran www.google.