CST is an acronym for Central Sales Tax which refers to the tax imposed by the Government of India on sales of products. CST is applied in situations involving sales of products between states and does not apply to the sale of goods or products with a state or exported and imported goods. An interstate sale refers to cases where purchases and sales constitute transfer of products from one state to the other. According the CST Act, the transfer of consignments to a branch office or to an agent in another state does not consist an interstate sale. CST is paid to the state where goods are sold and is paid before the transfer commences and remains in the state where it is collected. Tax authorities in every state are responsible for administration of CST therefore the sales tax officer from state government who does state tax assessment and collection also does CST tax assessment and collection.
Importance of CST
CST is a tax introduced by the CST Act. This Act was put in place to allow for formulation of principles that help determine at what point a purchase or a sale of products happens. It provides for levying, distribution and collection of taxes on goods sold in the process of interstate commerce. CST also allows for declaration of particular goods as of great importance in interstate trade. It specifies the conditions and restrictions that laws that impose taxes on purchase or sale of goods within a state are subject to and allows for tax collection in case a company liquidates. The CST Act also provides the authority to address disputes during trade processes across state borders. For this law to take effect, both the buyer and the dealer have to be registered in accordance to the law. They should be conducting business and there has to be sale should constitute transfer of products from one state to another.