Page 202 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Unit 12: Central Sales Tax

Appropriate State [Section 2(A)] Notes

It means –
(1) In relation to a dealer who has one or more place of business situated in the same state, that
state, and

(2) In relation to a dealer who has more than one place of business situated in different states,
every such state with respect to the place or places of business situated within its territory.

Example: Mr. X has one place of business at Faridabad and other at Sonepat, since both
the cities are in the state of Haryana therefore, the appropriate state will be Haryana.

Business [Section 2(AA)]

(a) Any trade, commerce or manufacture or any adventure or concern in the nature of trade,
commerce or manufacture, whether or not it is carried on with a motive to make gain or profit
and whether or not any profit or gain accrues from it, and

(b) Any transaction in connection with or incidental or ancillary to such trade, commerce,
manufacture, adventure or concern. According to the above definition –

 It is not necessary to have profit motive to call an activity a business.
 Regularity of business is not essential.
 Business may be legal or illegal.
Any transaction incidental or ancillary to business will also be treated as business. For example,
if a registered dealer sells outdated machines, he will be liable to pay central sales tax on it.

Notes The rates of tax on declared goods are lower as compared to the rate of tax on goods
in the second category.

Dealer [Section 2(B)]

Any person who carries on (whether regularly or otherwise) the business of buying, selling,
supplying or distributing goods, directly or indirectly, for cash or for deferred payment, or for
commission, remuneration or other valuable consideration It includes -

1. A local authority, a body corporate, a company, any cooperative society, other society, club,
firm, Hindu undivided family, association of persons which carries on such business.
2. A factor, broker, commission agent who carries on business of buying, selling, supplying or
distributing goods belonging to any principal.
3. An auctioneer who carrier on the business of selling or auctioning goods belonging to any
principal.

4. Government.
However, in case of sale, supply or distribution of old obsolete or waste products, government
is not liable to pay tax under this Act.

This exception does not apply to government companies, public sector undertakings, and private
enterprises. Under this Act services are not considered. Therefore, if a person is rendering
professional service of any type say teacher, doctor etc. shall not be treated as dealer.

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