Sales Tax i.e. the Central Sales Tax (CST) is an indirect tax as it is recovered from the buyers/consumers as a part of the consideration for the sale of goods. However, for the purpose of CST, the actual payment of the Sales Tax is made by every dealer on the goods sold by him in the course of inter-state trade or commerce. This tax is payable even though there may be no liability to pay the tax on the sale of goods according to the tax laws of that particular state.

Person Liable to Pay Central Sales Tax

Section 8(1) of the Central Sales Tax states that every dealer who is in the course of inter-state trade or commerce will be liable to pay tax on sale of goods under this Act. Thus, liability to pay Sales Tax lies with the dealer who sells the goods. Dealer for the purpose of this Act includes:

Dealer �

                   Section 2(b) of the CST Act defines the word dealer. Dealer means any person who carries on the business of buying, selling, supplying or distribution of goods. The business could be carried on either regularly or otherwise, either directly or indirectly, either for cash or for deferred payment or for valuable consideration. Any person who is a dealer would be liable to pay Sales Tax.

The term dealer includes:

1. a local authority, a body corporate, a company, any cooperative society, club, firm, Hindu Undivided Family (HUF) or other Association Of Persons (AOP) which carries on such business;
2. a factor, broker, commission agent, del credere agent, or any other mercantile agent, by whatever name called who carries on the business of buying, selling, supplying or distribution of goods belonging to any principal whether disclosed or not; and
3. an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of principal.

Government as a Dealer �

                                         Explanation 2 of Section 2(b) of the Act clarifies that the Government which buys, sells, supplies or distributes goods, whether in the course of business or not, whether directly or otherwise, whether for cash or deferred payment or for commission, remuneration or other valuable consideration, shall be a dealer and would require to pay Sales Tax. Government can be a dealer if specifically included in the definition of dealer.

The exception to this clause

 Is the sale, supply or distribution of un-serviceable or old stores or old materials or waste products or obsolete or discarded machinery or parts or accessories. This exception is made because of the fact that all Government departments have to make such sale of old goods. But, this exception is not applicable to private enterprises. It is made only for Government. Public Sector Undertakings (PSU i.e. Government Companies) are notGovernment and hence do not fall under the exemption.

Ancillary, Incidental and Casual Business Dealer�

                                                                                    Any activity which is incidental or ancillary to the main business also constitutes business and thus, any person engaged in such business or any other casual business is also a dealer and is liable to pay Sales Tax.  

Club as a dealer �

                           A members club whether incorporated or unincorporated is a dealer and will require registration. It is stated that the supply of goods by an unincorporated body to its members will be considered sale. Thus a club that supplies goods to its members is a dealer and thus liable to pay CST.

To Whom Central Sales Tax is Payable

Sales Taxis paid to the Sales Tax Authority in the state from where the goods are moved, i.e. the state from where the movement of goods begin. The dealer would pay the tax to the state authority from where he makes the sale, even though there may be no liability of tax on sale of goods according to the tax laws of that state itself.