Today we are discuss on meaning, provision and taxability of sale of goods in transits , what are the compliance need to be done and forms for transfer the goods without taking delivery.
Meaning of sale of goods in transit –
If we purchased the goods from the dealer of one state and without taking the delivery it has been sale to another dealer of another state it will be considered as sale of goods in transits.
When Form E-I & E-II to be used?
E-I and E-II will be used when there is merely a transfer of document of title from one person to another & another person to third person and goods move from one state to another state.
Why E-I & E-II Forms?
When dealer sales goods from one state to another state then dealer selling the goods collect the tax from buyer & deposit it into the government. A person who buys the good resell the same goods to person outside the state then again tax is liveable. Then there is situation arises of double taxation. To overcome the situation of double taxation the concept of E-I & E-II arises.
According to section 6(2) of central sales tax Act, 1956 when there is two times interstate sales then first sales will be taxable & second sale will be exempt from tax. For making the second sales exempt from tax the Form E-I & E-II are to be issued by seller.
What is the Procedure of issuing E-1 and E-2?
When first time sale is made the form E-I is issued by seller to the buyer & buyer issues C form to the seller. When buyer again sales the goods to the another buyer in another state the form E-II is issued by Second seller to the second buyer & second buyer will issue Form C to the second seller to claim exemption from Tax.
Example:
Akshay of Gujarat sells goods to Ankit of Maharashtra. Ankit of Maharashtra again sells goods to Harshit of Tamilnadu. In this example Akshay of Gujarat dispatch goods directly to Harshit of Tamilnadu but transfer document of title to Ankit of Maharashtra & Ankit of Maharashtra will transfer the document of title to Harshit of Tamilnadu.
In this example Akshay of Gujarat will issue Form E-I to Ankit of Maharashtra & Ankit of Maharashtra will issue Form C to Akshay of Gujarat.
In second interstate sales Ankit of Maharashtra will issues Form E-II to Harshit of Tamilnadu & Harshit of Tamilnadu will issue Form C to Ankit of Maharashtra & get exemption from payment of Tax.
Sale of Goods in Transit in Central Excise
Provision of Sale in transist in central excise before amendment are as follow –
Sale in transist on the direction of Registered dealer –
In case of sale of goods directly by the manufacturer to the dealer , consignee on the direction of the registered dealer the consignee can take the cenvat credit on the basis of manufacturer invoice. and registered dealer can make an commercial invoice.
Sale in transist on the direction of Unregistered dealer –
In case of sale of goods directly by the manufacturer to the dealer , consignee on the direction of the unregistered dealer the consignee can take the cenvat credit on the basis of manufacturer invoice. and unregistered dealer can make an commercial invoice.
Amendment in central Excise for Sale of goods in transist
Amendment made in provision as on 01/03/2015 by Notification no 08/2015. If the goods are directly send by the Manufacturer to the consignee under the direction from the dealer than the consignee can take the cenvat credit on the basis of registered dealer invoice .Provided that the invoice of the manufacturer should contain the name of the dealer as the buyer and person receiving the goods as an asseseee.
Sale in transist on the direction of Registered dealer after Notification no 08/2015
In case of sale of goods directly by the manufacturer to the dealer , consignee on the direction of the registered dealer the consignee can take the cenvat credit on the basis of dealer invoice. and Manufacturer Invoice should contain the first stage dealer as buyer and Consignee name in the invoice.
A Registered dealer need not necessary to take the physical delivery of goods he can directly deliver the goods from the manufacturer to the consignee address and consignee can take the cenvat credit on the basis of registered dealer invoice.
Sale in transist on the direction of Unregistered dealer after Notification no 08/2015
There is an ambiguity on What will happen to unregistered dealer is not cleared in amendment.
Is he need to get himself registered in central excise for cenvat credit pass on.
Or before amendment he can pass on the cenvat credit on the basis of manufacturer invoice to the consignee.
Unregistered Dealer Not required to take Excise registration –
Department has issued an clarity circular No -1003 Now no need of Excise registration by the dealer as old system for unregistered dealer will be continues.
Circular No 1003 is regarding clarity on cenvat credit for sale of goods in transist through dealer.
