Central Sales Tax Act, 1956 | Updated October 2026

Section 6 of the Central Sales Tax Act, 1956: Liability on Interstate Sales

Section 6 of the Central Sales Tax Act, 1956 (CST Act) establishes liability for tax on qualifying sales in the course of interstate trade or commerce. It also provides exemptions for specified export-related transactions, subsequent sales during movement of goods, and certain diplomatic purchases. Since the introduction of GST on 1 July 2017, its practical scope is substantially narrower.

Current legal position: Under Section 2(d), as amended by the Taxation Laws (Amendment) Act, 2017, CST applies to the six specified categories of goods: petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption. Most other interstate supplies are governed by GST, principally the Integrated Goods and Services Tax Act, 2017. For historical periods, the law applicable to the relevant transaction date must be considered.

Meaning of interstate sale and goods under CST

Under Section 3, a sale or purchase is in the course of interstate trade or commerce if it occasions movement of goods from one State to another, or is effected by transfer of documents of title to the goods during such movement. Section 2(d) defines the goods covered by the CST Act following the 2017 amendment. Section 6 must be read together with these definitions and with Sections 5, 8 and 9.

The mere fact that the seller and buyer are located in different States is not, by itself, a substitute for applying the statutory tests. The contract, movement of goods and documents of title are relevant to classification.

Section 6(1): general liability to CST

Section 6(1) imposes tax liability on a dealer for interstate sales of goods (other than electrical energy), subject to the other provisions of the Act. The statutory commencement mechanism referred to a date notified by the Central Government, not earlier than thirty days after notification. The original CST levy commenced in 1957; that historical commencement language does not create a fresh waiting period for present-day transactions.

Export proviso: A sale that qualifies as a sale in the course of export under Section 5(3) is excluded from liability under Section 6(1), subject to the statutory conditions. Section 5(3) concerns the last sale or purchase preceding export when it occurs after, and for the purpose of complying with, an agreement or order for that export.

Section 6(1A): State exemption does not automatically remove CST

Under Section 6(1A), an interstate sale may attract CST even where no tax would have been leviable under the appropriate State's sales tax law had the sale occurred within that State. Any exemption must be established under the applicable provisions of the CST Act itself.

Section 6(2): exemption for subsequent sales during transit

Section 6(2) deals with a subsequent interstate sale of goods during their movement from one State to another, effected by transfer of documents of title to those goods. Where the statutory requirements are met, the subsequent sale to the Government, or to a registered dealer for goods described in Section 8(3), is exempt from CST.

The exemption is conditional, not automatic. In particular, the dealer effecting the subsequent sale must ordinarily furnish the prescribed certificate from the preceding registered seller and the required declaration or certificate from the subsequent buyer, in the prescribed manner and time (including permitted extensions).

Form E-I or E-II: the prescribed certificate, as applicable, evidencing the preceding interstate transaction in the chain.
Form C: declaration under Section 8(4)(a), where the subsequent sale is to a qualifying registered dealer.
Form D or applicable government certificate: the prescribed certificate under Section 8(4)(b), where the subsequent sale is to the Government not registered as a dealer, subject to the law applicable to the transaction period.

The second proviso to Section 6(2) provides a limited relaxation from furnishing the buyer's declaration or certificate in specified circumstances involving goods generally exempt or taxed below the statutory threshold under the appropriate State law, provided the dealer proves the required facts to the authority. Its application must be assessed against the relevant period and amendments, rather than assumed for every current transaction.

For a valid transit sale, the transfer of title documents must take place during movement of the goods. A fresh sale after delivery or termination of movement may not qualify.

Sections 6(3) and 6(4): diplomatic and international organisation exemption

Section 6(3) exempts qualifying interstate sales to officials, personnel, consular or diplomatic agents of foreign diplomatic missions or consulates in India, or the United Nations and similar international bodies entitled to privileges under applicable law or agreements. The purchase must satisfy the statutory purpose and eligibility conditions.

Section 6(4) requires the selling dealer to furnish the prescribed certificate, properly completed and signed by the qualifying official or agent. Without the required documentation, the exemption under subsection (3) is unavailable.

Records, tax rate and practical examples

Dealers should retain contracts, tax invoices, transport records, delivery challans, lorry receipts or railway receipts, endorsements or transfers of documents of title, registration particulars, relevant E-I/E-II and C declarations, and any diplomatic certificates. The appropriate State tax authority may prescribe filing methods and time limits.

Example: Dealer A dispatches qualifying goods from State X to Dealer B in State Y. While the goods are moving, B transfers the documents of title to Dealer C. If the transaction meets Section 6(2), the required buyer eligibility and statutory declarations or certificates are established, B's subsequent sale may qualify for exemption. Merely issuing a second invoice without a qualifying transfer of title during movement is insufficient.

Rate and collection: Section 6 establishes liability, but does not by itself prescribe a universal CST rate. Section 8 governs rates and concessional purchases, while Section 9 governs levy and collection arrangements. The actual treatment depends on the commodity, buyer, declarations, transaction date and applicable law.

Frequently asked questions

Does CST apply to every interstate sale after GST?

No. From 1 July 2017, the CST definition of goods was restricted to six specified categories under Section 2(d). Most other interstate taxable supplies fall within the GST framework.

Does Section 6(2) exempt every resale?

No. The subsequent sale must occur by transfer of documents of title during movement, satisfy the specified buyer and goods conditions, and meet applicable evidence requirements.

Is an interstate sale exempt simply because it is exempt within the State?

Not necessarily. Section 6(1A) expressly addresses this distinction. Any exemption must follow the applicable CST provisions.

Official law and further reading

Legal information updated on 6 October 2026. Apply the statutory text, notifications and binding decisions relevant to the transaction date and jurisdiction.