Excise and cst/vat

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2012 Can a Invoice be billed to one party having CST No. to the account of another party with Excise no. and further delivery to third party warehouse with all related tax ID nos.
All are genuine tax payers but may have problem as one of the registration was not required earlier.

U S Sharma

U S Sharma (Expert)
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20 August 2012 NO

invoice would be raised to the holder of CST / Excise registration holder only, however there is no such restriction by transfer of goods by the registered buyer to any 3rd party for delivery under CST sec 6(3) E-1 sales.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 Dear Sharmaji, I am not clear on CST or Excise means what? as per your reply whether the first party should be CST one or Excise one.
1)In this case the bill is asked in for Excise registered party to the account of CST party. In other words can one party take excise benefit and other party give C Form?
2) Also though Excise no. and CST No. shall be written but each will be written in the field provided of the Invoice so no party distinction will bepossible as to who has which related no.

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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21 July 2024 In the context of Indian taxation laws, particularly under the erstwhile Central Excise and CST/VAT regimes (now replaced by GST), the scenario you described involves certain complexities and considerations:

1. **Billing to One Party with CST No., Delivery to Another with Excise No., and Further to Third Party**:
- **Central Excise Registration**: Central Excise registration is required for manufacturers who produce goods liable to excise duty. It allows them to manufacture, store, and transport goods under the Central Excise rules.
- **CST Registration**: CST (Central Sales Tax) registration is required for interstate sales transactions. It identifies a dealer who is eligible to collect CST on sales made to parties outside the state.
- **VAT Registration**: VAT (Value Added Tax) registration is required for intra-state sales transactions. It applies to sales of goods within the same state and is governed by state-specific VAT laws.

2. **Issues and Considerations**:
- **Invoice and Delivery Chain**: In your scenario, if an invoice is billed to one party with a CST number, and the goods are delivered to another party who has an Excise registration, and then further delivered to a third-party warehouse, it raises several compliance and logistical considerations:
- **Chain of Custody**: The movement of goods and the corresponding documentation (invoices, delivery challans) must accurately reflect the flow of goods from the point of origin to the final destination.
- **Tax Liability**: Each entity in the chain (seller, buyer, transporter, warehouse) must comply with their respective tax obligations (Excise duty, CST/VAT, GST in the current regime).
- **Risk of Non-compliance**: Any discrepancy or mismatch in documentation or non-compliance with tax registrations could lead to penalties, interest, or other legal consequences under the respective tax laws.

3. **GST Regime**: Since July 1, 2017, India has implemented the Goods and Services Tax (GST), which subsumed Central Excise, VAT, and other indirect taxes. Under GST, the invoicing and supply chain scenarios are governed by unified rules applicable across the country.

- **Input Tax Credit (ITC)**: Under GST, the recipient can claim Input Tax Credit (ITC) based on the tax invoice received. However, correct and valid documentation is crucial for claiming ITC.

4. **Legal and Compliance Requirements**:
- **Registration**: Entities involved in manufacturing, sale, transport, or storage of goods must ensure they are registered under GST and comply with the invoicing, e-way bill, and other compliance requirements as per GST laws.
- **Documentation**: All transactions must be supported by proper invoices, delivery challans, and other statutory documents that accurately reflect the movement of goods and taxes paid.

5. **Consultation**: Given the complexities involved in cross-state transactions and movement of goods, it's advisable to consult with a qualified GST practitioner or tax advisor. They can provide guidance tailored to your specific circumstances, ensuring compliance with GST laws and minimizing the risk of non-compliance or penalties.

In conclusion, while the scenario you described may involve genuine taxpayers, adherence to tax registration requirements and compliance with GST laws is crucial to avoid legal issues and ensure smooth business operations.