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A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State-

  • in the case of specific or ascertained goods, at the time the contract of sale is made
  • in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation.

 

 Analysis

 There are 3 types of goods in case of sales

Specific Goods

Goods identified and agreed upon at the time a contract of sale is made

 

Unascertained Goods

These goods are defined only by description and not identified and agreed upon at the time of contract.

Unascertained goods may be existing goods or future goods.

 

Ascertained Goods

When unascertained goods are identified as per sales agreement, they became ascertained

 

 

WHEN IS SALE WITHIN STATE

In case of Specific Goods or Ascertained Goods

Sale is local if the goods are within the State at the time the contract of sale is made

  

In case of Unascertained Goods

Sale is local if the goods are within the State at the time of their appropriation to the contract of sale by the seller or by the buyer

  

 

Type of Goods

Meaning

Sale is local if goods are within state

Specific Goods

 

Goods identified and agreed upon at the time a contract of sale is made

 

at the time the contract of sale is made

Unascertained Goods

 

These goods are defined only by description and not identified and agreed upon at the time of contract.

 

They may be existing goods or future goods.

 

 

at the time of their appropriation to the contract of sale by the seller or by the buyer

 

Ascertained Goods

 

When unascertained goods are identified as per sales agreement, they became ascertained

 

 

at the time the contract of sale is made

 

Important Points

Section 4 is subject to the provisions of section 3. Provisions of section 4 would apply only when sales of goods is not an ‘inter-State sale’ under section 3.

If there is a single contract of sale or purchase of goods situated at more than one places, it shall be deemed that there are separate contracts in respect of the goods at each of such place to determine whether they are sales within state or not.

 

 

  1. Indirect Tax
  2. CST
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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