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"As per the Hon’ble Supreme Court Judgment reported in 19 VST 239 to claim sales under E1 sales, the first leg of transaction should necessarily be an interstate sales transactions. The transactions between the appellant dealers and their buyer situated in this State is local sales with local C form it is neither an E1 sales nor an interstates sales. In view of the Hon’ble Supreme Court in the case of A&C Projects And Technologies Ltd. Vs. State of http://www.judis.nic.in  Judgt. dt. 22.9.2020 in T.C.52 of 2016 National Engg. Industries v. State of TN Karnataka reported in 019 VST 0239 has held that to qualify of E1 transaction exemption the first transaction should be an interstate transactions. i.e there shall be movement of goods from one state to another in respect of the first transactions. In the instant case both the dealers reside in the State of Tamil Nadu and transactions is between the two Tamil Nadu dealers, such transactions effected before crossing the State boundary. Hence the Central Sales Tax Act would apply only when there is two States involved or continue to involve. Here the first transaction there was no two States involved. Sales invoices are made to above Tamil Nadu dealers also as interstate sales by collecting CST @ 4% for the above transactions the dealer received C forms issued by the Tamil Nadu Dealers. The appellant dealers wrongly claimed local sales as interstate sales and availed concessional rate of tax at 4% against C form. For the transactions the dealers have used the C forms issued by the dealers situated within Tamil Nadu. As http://www.judis.nic.in  Judgt. dt. 22.9.2020 in T.C.52 of 2016 National Engg. Industries v. State of TN per section 8(4) of the Central Sales Tax Act 1956 Act 1956, C forms can be issued for any sale in course of inter-state trade or commerce whereas, sales between the parties situated within the same State without any existence of interstate movement preceding the sale is only a local sales and C forms cannot be issued for such local sales.

Thus it is evident from the above-that as long as the transactions were effected within this State without actual movement of goods to another State at the start of first transaction it is liable to tax under the local TNGST Act only and the subsequent interstate sales made by you is an interstate sales liable to tax at 4% with C form and at 10% without C forms. It is immaterial on the final destination of the goods moved. In simple terms the first leg of transaction should be interstate transaction to qualify for assessment under Central Sales Tax 1956. Hence the claim interstate sales between two buyers residing within the State by issuing C forms pertaining to the same State is incorrect. These http://www.judis.nic.in  Judgt. dt. 22.9.2020 in T.C.52 of 2016 National Engg. Industries v. State of TN transactions are nothing but local sales assessable under the TNGST Act only.