• Can I sell products online to other state without haiving VAT/CST

Dear Sir/Madam,

I have a Trading license in Tripura for my shop. Now I wish to start an online shop of own products (same as listed in the trading license) but will be operating from Bangalore and from a rented house (since machines are not large and environment friendly) and will also ship to other states within India. Will it be possible? Also I have not applied for VAT since my business turnover is not more than 5 Lacs. I will buy a unique domain and host it and would also like to have a secured payment gateway. However I will have my own tie ups with logistics and may also deliver physically if order is local. I hold a current account in Agartala, Tripura. Kindly advise if I can run my business in this way legally? What are the legal activities I will need to take care. Thanks much for your help
Asked 8 months ago in Business Law from Bangalore, Karnataka
Every citizen of India can do business in or across any part of India. This right is given by the constitution under article 19 (1) (g).

You should have register your company as a PVT Ltd company for online business for getting two tier tax benefits. 

Shivendra Pratap Singh
Advocate, Lucknow
2729 Answers
41 Consultations
4.9 on 5.0
1)  if your turnover exceeds Rs 5 lakhs you would need VAT registration . 

2) VAT registration is required if you are buying or selling taxable goods 

2) Submit an application for VAT in Form 1 along with the following documents to the local VAT office:
 
•	Central Sales Tax registration certificate(Form A)
•	Professional tax registration certificate(Form 2)
• Copy of important documents such as the address proof, ID proof of the Proprietor
•	Four PP size photographs of the Proprietor
•	PAN No. & Bank Account No of the Proprietor
•	Copy of the rental agreement of the business place
•	Details of business activities

3) The authorities from the local VAT office will inspect the premises of where you conduct business within a prescribed time
 
4) 	Once the inspection is over, you will have to pay a specified fee to the local office for your VAT registration
 
5) 	On payment of the fee, a TIN number will be allotted to you for your business and you will also be given the VAT registration Certificate.

6) you would have to furnish  surety in prescribed format for purpose of proper payment of value added tax to indemnify govt against loss that may be caused for failure to pay tax  within prescribed period

7)  Since  you  are collecting payment of the sale price of goods (in addition to handling of goods, as the case may be), they would be deemed to be dealer for the sales tax purposes.

8) if you own and store goods even before receiving of customer’s order you  liable to pay sales tax in the same manner as any other dealer.

9) if you are acting as merely facilitator between seller and buyer you dont have to pay VAT . goods remain in the custody of the supplier, who delivers the goods and raises invoice on the customer as his own goods. 
Ajay Sethi
Advocate, Mumbai
23116 Answers
1214 Consultations
5.0 on 5.0
Hi 
if you are planning to operate from Bangalore, you will  need  to obtain license under Karnataka Shops and Establishments Act.
Also you need to apply for Sales tax  (KST and CST)  as you are planning to buy/ sell goods from / to other states in india. 
There is an exemption if your turnover is under 5Lakhs and if you intend to sell within karnataka. but in case you are making any purchases / sales outside karnataka, you will need to register with Authorities.
Rajgopalan Sripathi
Advocate, Hyderabad
869 Answers
43 Consultations
5.0 on 5.0
A dealer shall be liable to pay tax under the CST Act on the sale of any goods effected in the course of inter- State trade though no tax can be levied under the local sales tax Act of the appropriate State if such sale is Intra state sale. 
Yes, Sec.6 (1) of CST Act provides that every dealer shall be liable to pay tax under this Act on all sale of goods (other than electrical energy) effected by him in the course of inter-state trade.  Goods here include all materials/articles/ commodities and other kinds of moveable property. The definition of goods however excludes electricity, newspapers, stocks and shares.
VAT is intended to tax every stage of sale where some value is added to raw materials, but taxpayers will receive credit for tax already paid on procurement stages. VAT can be imposed only when tangible goods and products are sold. Every state has a separate and distinct VAT act reserved for their state
VAT is intra state and CST is inter state. 
Section 6(2) of CST Act gives an exemption to subsequent interstate sale affected by transfer of documents of title to goods when the goods are in movement from one state to another. However such exemption to subsequent inter-state sale is subject to production of Form E-I, as obtained from prior vendor and ‘C’ form from buyer.
You are required to get VAT registration even if you are doing trading online.

The dealers involving in e-commerce should disclose and pay VAT or Central Sales Tax for all transactions through e-commerce portals and if they fail to do so, legal action will be taken against them by the commercial taxes department.  If the online retailer delivers goods from the State to a consumer in another State, Central Sales Tax is payable.
T Kalaiselvan
Advocate, Vellore
13919 Answers
127 Consultations
5.0 on 5.0
If you have complied with the prescribed formalities in this regard, you may continue with the proposed  business legally without any further complications in this regard. 
Sec.6 (1) of CST Act provides that every dealer shall be liable to pay tax under this Act on all sale of goods (other than electrical energy) effected by him in the course of inter-state trade.
In my opinion since you have complied with the formalities in this regard you should not get any problem and can peacefully proceed with the proposed online business. 
T Kalaiselvan
Advocate, Vellore
13919 Answers
127 Consultations
5.0 on 5.0
Since you have obtained trade licence and applied for VAT and CST from home state you can supply goods from your home state to another state 

2) registration of dealer becomes compulsory under CST when he affects inter state sale 
Ajay Sethi
Advocate, Mumbai
23116 Answers
1214 Consultations
5.0 on 5.0
Absolutely yes. Keep filing commercial tax  returns on a timely basis ( you will come under self declaration rule. No tax inspector can come for inspection) .  Wishing you the very best. happy selling. 
Rajgopalan Sripathi
Advocate, Hyderabad
869 Answers
43 Consultations
5.0 on 5.0

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