Sales are broadly classified into 3 categories.
a) Inter state Sales
b) Sales in Transit
c) Intra state sales
In case of Inter state sales, the sales tax is collected by the Union Govt. The Central Sales Tax is applicable as per the CST rate applicable for sale within the state or it is 2% upon production of Concessional form (C-Form) by the Purchaser.
As per the senction 6(2) of the Central Sales Tax Act 1956, where a sale of goods in the course of inter state trades or commerce has either occasioned the movement of such goods from one state to another or has affected the transfer of document titles of the goods during their movement to one state to another; Any subsequent sales during such movement effected by document transfers of titles of the goods to any authorised dealer or to the Government shall exempt from Tax. This mechanism is known as Sale In Transit.
The Sale In Transit can be broadly divided in two types.
1) E1-Transaction
2) E2-Transaction
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