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Unit 12: Central Sales Tax

12.5 Inter-state Sales Tax Notes

The charging section under the Central Sales Tax Act which provides for inter-sales tax is as
follows:

Liability to Tax on Inter-state Sales

(1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such
date as the Central Government may, by notification in the Official Gazette, appoint, not being
earlier than thirty days from the date of such notification, be liable to pay tax under this Act on
all sales of goods other than electrical energy effected by him in the course of inter State
trade or commerce during any year on and from the date so notified.
(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in
the course of inter-State trade or commerce notwithstanding that no tax would have been leviable
(whether on the seller or the purchaser) under the sales tax law of the appropriate State if that
sale had taken place inside that State.
(2) Notwithstanding anything contained in sub-section (1) or sub-section (IA), where a sale of
any goods in the course of inter-State trade or commerce has either occasioned the movement of
such goods from one State to another or has been effected by a transfer of documents of title to
such goods during their movement from one State to another, any subsequent sale during such
movement effected by a transfer of documents of title to such goods;
(a) to the Government, or
(b) to a registered dealer other than the Government, if the goods are of the description referred
to in sub-section (3) of section 8, shall be exempt from tax under this Act:
Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the
dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and
within the prescribed time or within such further time as that authority may, for sufficient cause,
permit,-

(a) a certificate duly filled and signed by the registered dealer from whom the goods were
purchased containing the prescribed particulars in a prescribed form obtained from the prescribed
authority; and

(b) if the subsequent sale is made-
(i) to a registered dealer, a declaration referred to in clause (a) of sub-section (4) of section 8, or
(ii) to the Government, not being a registered dealer, a certificate referred to in clause (b) of
sub-section (4) of section 8
Provided further that it shall not be necessary to furnish the declaration or the certificate referred
to in clause (b) of the preceding proviso in respect of a subsequent sale of goods if,-
(a) the sale or purchase of such goods is, under the sales tax law of the appropriate State exempt
from tax generally or is subject to tax generally at a rate which is lower than 4 (four) percent
(whether called a tax or fee or by any other name); and
(b) the dealer effecting such subsequent sales proves to the satisfaction of the authority referred
to in the preceding proviso that such sale is of the nature referred to in clause (a) or clause (b) of
this sub-section.
Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.
(1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods,
on the ground that the movement of such goods from one State to another was occasioned by

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