IS TAX LEVIED ON EI TO C FORM SALE

This query is : Resolved

Vikas Sharma (Querist)
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01 April 2021 A (silvassa) sale goods (Polyster yarn) to B (Panipat) on EI form and B sale goods to C (Panipat) on c form and c is a manufacture of mink blanket items. The C manufactured the item blankets that is tax free items in haryana and sold as a tax free. is any tax levied on all this, please explain

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 July 2024 In the scenario described, let's break down the tax implications for each transaction and the applicable forms:

1. **Sale from A (Silvassa) to B (Panipat) on EI Form:**
- A (from Silvassa) sells polyester yarn to B (in Panipat) using an EI (Exempted Interstate) Form. This form is used to claim exemption from GST on interstate sales under specific conditions, such as for resellers or manufacturers purchasing goods for further sale or use in manufacturing.
- The sale of polyester yarn from A to B should be exempt from GST provided the EI Form is correctly filled and submitted.

2. **Sale from B (Panipat) to C (Panipat) on C Form:**
- B (located in Panipat) sells goods (polyester yarn) to C (also in Panipat) using a C Form. The C Form is used for interstate purchases by registered dealers at a concessional rate of CST (Central Sales Tax), typically 2% or the rate applicable in the selling state, whichever is lower.
- This sale would be taxed at a concessional rate of CST under the C Form, assuming all conditions for using the C Form are met.

3. **Manufacture and Sale of Mink Blankets by C (Panipat):**
- C (based in Panipat) manufactures mink blankets using the polyester yarn purchased from B (with the C Form). Mink blankets are tax-free items in Haryana, meaning they are exempt from GST.
- When C sells these tax-free items (mink blankets) within Haryana, no GST is levied on the sale of these goods.

**Tax Implications Summary:**
- **Interstate Sale (A to B):** Exempt from GST using EI Form, assuming all conditions are met.
- **Interstate Purchase (B from A):** Taxed at concessional CST rate using C Form, assuming all conditions are met.
- **Intrastate Sale (B to C):** Taxed at concessional CST rate using C Form, assuming all conditions are met.
- **Intrastate Sale of Tax-Free Goods (C to Customers in Haryana):** No GST applicable on the sale of mink blankets within Haryana, as they are tax-free items.

It's important to ensure that all forms (EI and C Forms) are correctly filled and submitted according to GST rules to avail of the respective exemptions or concessional rates. This helps in complying with interstate trade regulations and minimizing tax liabilities appropriately.