Consignment & sale in transit sale under cst act 1956
This query is : Resolved
21 February 2014
pls tell me the procedure of Consignment sale & Sale in transit under CST Act 1956 & what is difference in both transaction.
21 February 2014
Consignment Sale means that you transfer goods to your agent for sale and pay commission to the agent. In case the agent is not able to sell the goods the good are sent back to principal. Also note that if you transfer the goods to agent the agent has to give you "form f" as per CST Act 1956 or else tax would be levied on the same.
Transit are generally known in the market as ‘LR sales’, ‘RR sales’, ‘subsequent inter-State sales’ and ‘EI sales’. However these words including the words ‘transit sales’ do not find place in the statute. These transactions fall under clause (b) of section 3 of the Central Act, which reads as follows:
“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 inter-State trade or commerce if the sale or purchase –
a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.
Explanation 1: Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.
Explanation 2: Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State.”
In these transactions, there would be no sale of goods, when the goods commence inter-State movement but a sale contract is made or comes into being, during the course of inter-State movement. A transaction can be either falling under clause (a) or under clause (b) but not under both the clauses at the same time. The assessing authority has to keep in mind the Explanation-I under section 3 while deciding the nature of these transactions. A sale is said to be falling under clause (b), if there is transfer of document of title to the goods during the course of movement from one State to another State. Documents of title include sale invoice, way bill, delivery challan, lorry receipt, railway receipt; etc. At the time of such transfer, the goods may be in the originating State or in the destination State. If the goods are taken delivery from the common carrier for example, lorry office or railways by the purchaser, then there is said to be break in inter-State movement of goods and there can be no transit sale thereafter. The person making a transit sale is also called subsequent inter State seller.
Transit are generally known in the market as ‘LR sales’, ‘RR sales’, ‘subsequent inter-State sales’ and ‘EI sales’. However these words including the words ‘transit sales’ do not find place in the statute. These transactions fall under clause (b) of section 3 of the Central Act, which reads as follows:
“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 inter-State trade or commerce if the sale or purchase –
a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.
Explanation 1: Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.
Explanation 2: Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State.”
In these transactions, there would be no sale of goods, when the goods commence inter-State movement but a sale contract is made or comes into being, during the course of inter-State movement. A transaction can be either falling under clause (a) or under clause (b) but not under both the clauses at the same time. The assessing authority has to keep in mind the Explanation-I under section 3 while deciding the nature of these transactions. A sale is said to be falling under clause (b), if there is transfer of document of title to the goods during the course of movement from one State to another State. Documents of title include sale invoice, way bill, delivery challan, lorry receipt, railway receipt; etc. At the time of such transfer, the goods may be in the originating State or in the destination State. If the goods are taken delivery from the common carrier for example, lorry office or railways by the purchaser, then there is said to be break in inter-State movement of goods and there can be no transit sale thereafter. The person making a transit sale is also called subsequent inter State seller.
21 February 2014
In Case of Consignment Sale you have to enter in a contract with the agent as principal and agent
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