03 June 2009
Applicable sales tax law is decided based on movement of goods.
If movement of goods is between two states, Central sales tax (CST) is applicable. If movement of goods is within the same state, sales tax law of that state is applied.
Sales in transit can happen, when goods are in movement from one state to another state. It means that goods have not entered in buyer's state.
Original buyer endorses transport bill (so that delivery of goods can happen to new buyer) and handover relevant documents to new buyer. No sales tax is chargeable on the transaction and can be used as sales tax evasion tool, Hence, it is closely scrutinized by sales tax department.
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