Hi Pratik,
Hope you are using Ax2012 R3. As far as I know there is no standard option to calculate VAT or CST automatically based on the Location of the vendor and the warehouse. Currently if it is required you have to customize this. You have to attach both VAT,CST tax codes to vendor master using a custom field and while creating the PO, you have to update the relevant tax code VAT or CST based on the Vendor state and the deliveryLocation State. You may also customise for TaxType column if you require C-FORM to be by default.
I already logged this to MSFT and they promised to consider in future release. To speedup the process, You may please login to following link and Vote for it. https://connect.microsoft.com/dynamicssuggestions/feedback/details/808586/dynamics-ax-2012-sales-tax-vat-cst-for-india
Regards
BijuThomas