Procedure followed for the issue of form E1 & E2 - you can sell
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Procedure followed for the issue of form E1 & E2

vvkamath Started The Discussion:

Dear All,
I have purchased material from a authorised dealer in mumbai & the manufacturer was from gujarat. I Have received excise papers showing name of the buyer as my supplier & my company name in consignee column & I received Tax invoice from my dealer from mumbai.
Now, please tell me what form should I issue to the actual supplier & to the manufacturer. This transaction involves C form, E1 & E2 & I do not know which form I must get from them & which form I have to issue. Please help.

You only have to issue Form C to the Mumbai dealer, who is issuing the Tax Invoice. You didn't mention your location.
Further, please mention if the Mumbai daeler has charged any CST/VAT. Form E-1 is for claiming exemption from CST on subsequent sale.

Note the following extract :-

It is also held by judiciary that transfer of documents can take place even by instruction. Therefore it is not necessary that the sale by transfer of documents takes place when the document is first taken out between first seller and his buyer and then transferred by the buyer to his buyer. The buyer of first seller can give instruction to dispatch the goods directly to his customer. If such instructions are given and accordingly the goods are dispatched to third party (i.e., buyer’s buyer) it is because of transfer effected by the buyer of first seller. The transfer takes place while booking the goods in transport and this is also a transfer during course of movement. This is known as notional or constructive transfer. Since this transfer is taking place during course of movement from one State to other it is eligible for exemption u/s. 6(2). In such case the first seller is consignor and the buyer’s buyer is consignee. However the commercial bills will be by first seller to his buyer and then by the first buyer to his buyer. In such a case to enable the first buyer to claim exemption, E-I form is to be issued by first seller to such first buyer.

Thus, Form E-1 will be issued by the Gujrat dealer to your supplier and Form C will be issued by you to your supplier.

vvkamath - Contributing Member
Dear Arvind, Being a dealer of mumbai, I can not issue C form to a dealer of Mumbai. I do not think issuing C form is correct

Anil Sood - 
Dear Mr. VV Kamath
Following is the text of Sec3(b) of the CST Act
"3. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a)occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.

Explanation 1 : Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee."

In your case suppose Gujrat Manufacturar is A, Purchaser in Mumbai is B i.e the dealer transfering the goods on title or seller in transit and purchaser in transit is U. Now B will issue "C" form to A and A will issue form "E1" to B, same way B will issue "E2" form to U and U will issue "C" form to B after mentioning the number of "E2" form on it.

prbplr - 
Dear Seniors,
A is the Material Suplier in Mumbai (Maharastra)
B is the Buyer / Dealer in Hderabad (A.P, Hyderabad)
C Customor / Dealer in Hyderabad (A.P, Hyderabad)
My Question is:
Is the below transaction "Sale In Transit / E1 Transaction" or not ?.

B purchases the material from A under CST biling and B prepare a Invoice without any tax amount to C.
the material A Delivers in the name of B and B Endorse the L.R.in the name of C. so, material collects by C from transporter
and A issues "E1" form to B and collects Form"C" from B and B collect Form "C" from C
Please guide me.

Anil Sood - 
Dear prbpir

Please go through my old reply. Under CST Act Sale is not complete untill delivery is taken from the transporter. You can sell it in transit as many times as you want but conditions are that delivery from transporter is not taken and end sale should not end in the state of origin i.e in your case it is Maharatra. in your case following forms are required to be issued.
A will issue E1 form to B and will receive C form from B
B will issue C form to A and E2 form to C.
C will issue C form to B because though the last sale is in AP but sale is under CST Act i.e Sale in Transit U/S 3(b).
Had the C not taken delivery and decided to sell it to another customer D which is in any State other than Maharastra C would have issued E2 to D and had received C form from D. Hope this will clear the whole gambit of EI & E2 Froms

Anil Sood

kuna_2047 - 
may i know the e1 form deals has done only in inter state or it may be in same state also.

hello

our office is in bangalore. we have purchased the goods from Mumbai party @ cst 2% in december and sold to the customer in Kolar, karnataka. now if i ask E1 form from mumbai party, he is telling that we have to apply at the time of movement of goods only. what is the solution now?

Continuing the above example can b(2nd party) also add cst in his bill to the supplier(3rd party) in e1 sales, if he add cst in his bill will it be treated as e1 sales or not?

Dear Sir,

I am a dealer in Maharashtra. I have sold goods to party in Gujarat and that party sold goods to a party in Maharashtra again. However, due to obvious advantage he asked me to transport goods directly from my end to his client since both of us are in Maharashtra. I charged him 2% CST against Form 'C' but now he is asking for form E-1. I have received his Form 'C'. does this transaction require Form E-1 form if so how do I obtain E-1 form.

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