What is CST Registration

Central State Tax (CST) is an indirect tax which is paid ultimately by the consumer of the product. CST is levied by the Central Government on taxable turnover of inter-state sale of goods made by registered dealer in ordinary course of business.

What is interstate sale under CST?

A sale of goods shall be named as Interstate sale if the sale occasions the movement of goods from one State to another. For instance, a dealer in Delhi sells good to a Dealer in Mumbai and the goods good from one state to another.

A transfer of title of goods from one State to another can also be called an interstate sale, if sale is effected by transfer of documents of title of goods from one State to another. For instance, a product is sold by a dealer in Mumbai to a dealer in Delhi and while on transit, the dealer in Delhi sells the product to a dealer in Chennai. Then, there is said to be two interstate sale in this case.

What is stock transfer under CST?

In a product is owned by a company and the stock of the company is moved from one branch in a state to another branch in another state, then there is no sale; only movement of goods from one state to another. In such cases, CST is not applicable since there is no sale. However, while doing stock transfers from one state to another state, State VAT laws require reversal of input tax credit on purchases if such goods are transferred. Form F is required to establish stock transfer.

Getting CST Registration

Ever dealer liable to pay CST must register with the sales tax authorities and obtain a VAT/CST/TIN registration. Even if a dealer is not effecting interstate sales, voluntary CST registration can be obtained if the dealer is liable to pay VAT and the dealer does not have to pay tax under CST. Voluntary CST registration is useful for those dealer purchasing goods from out of state to sell it within the state.

Benefits of having CST registration

• Branch transfer or stock transfer is exempt from tax by submitting Form F.
• Dealer can claim benefit under section 5(3) of the CST Act by issuing Form H.
• Concessional rate of tax on interstate purchases by using Form C.
• Avoid penalty or prosecution for non-registration.
• No tax on purchases by a unit in special economic zone.