Extent and commencement of the Central Sales Tax Act 1956:
- It extends to the whole of India.
- It is divided into 6 chapters and 26 sections.
- It makes provision for single point as well as multiple-point tax.
- Under this Act, the goods have been classified as :
(i) declared goods or goods of special importance in inter-State trade or commerce, and
(ii) other goods.
The rates of tax on goods in the first category are lower as compared to the rates of tax on goods in the second category.
- There is no exemption limit for the levy of tax in relation to the turnover of the dealer. Every dealer, who is having inter-State trade, is liable to pay tax under the Act irrespective of the quantum of his turnover.
- Every dealer engaged in inter-State trade has to get himself registered and the certificate of registration has to be displayed at all places of his business.
- The tax is levied under this Act by the Central Government but it is collected by that State Government from where the goods have been sold outside the State. The tax thus collected is given to the same State Government which collected the tax. In the case of Union Territories, the tax collected is deposited in the Consolidated Fund of India.
- The Act does not provide rules regarding submission of returns, payment of tax, appeals, etc. For this purpose, the rules followed by a State in respect of its own sale-tax law shall be followed for the purposes of this Act also.
- The Central Government and the State Government are empowered to frame proper rules and regulations for the implementation of various provisions of this Act
Objects of enacting the Central Sales-Tax Act
The Act has been enacted to formulate the principles regarding the following :
(1) To formulate principles for determining when a sale or purchase of goods takes place:
(i) In the course of inter-State trade or commerce; or
(ii) Outside a State; or
(iii) In the course of import into or export from India.
(2) To provide for the levy, collecting and distribution of taxes on sales of goods in the course of inter-State trade or commerce.
(3) To declare certain goods to be of special importance in inter-State trade or commerce.
(4) To specify the restrictions and conditions to which state laws imposing taxes on the sale or purchase of goods of special importance in the course of inter-State trade and commerce shall be subjected to.
Declared goods are the goods of special importance on which there are certain restrictions placed under CST Act 1956 on imposition of sales tax or VAT by the states. Article286(3)(a) of the Constitution of India authorises parliament to declare some goods as of special importance and to impose restrictions and conditions in regard to power of the states in regard to levy, rates and other incidence of tax on such goods. Exercising this power the Parliament vide section 14 of the Central Sales Tax Act 1956 has declared some goods as of special importance and has placed restrictions u/s 15 of CST Act on the imposition of sales tax or VAT on such goods by the state Governments.
DEFINITION: Section 2(c) of CST Act defines Declared Goods as those declared u/s 14 of the CST Act as Goods of special importance in inter state trade or commerce.
Section 14 gives the list of ‘goods of special importance’ called Declared Goods important among them are numerated as below:
(i) cereals i.e -paddy, rice, wheat,Jowar,bajra, maize, barley etc.
(ia) coal, including coke in all its forms, but excluding charcoal:
(ii) cotton, that is to say, all kinds of cotton (indigenous or imported) in its unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste;
(iia) cotton fabrics
(iib) cotton yarn, but not including cotton yarn waste;
(iic) crude oil, that is to say, crude petroleum oils and crude oils etc.
(iid) Aviation Turbine Fuel sold to a Turbo-Prop Aircraft ;
(iii) hides and skins, whether in a raw or dressed state;
(iv) iron and steel, that is to say,-
(i) pig iron, sponge iron and cast iron including ingot the moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skull scrap ;
(ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes) ;
(iii) skelp bars, tin bars, sheet bars, hoe-bars and sleeper bars ;
(iv) steel bars (rounds, rods, squares, flats, octagons and hexagons, plain and ribbed or twisted, in coil form as well as straight lengths) ;
(v) steel structurals (angles, joists, channels, tees, sheet piling sections, Z sections or any other rolled sections) ;
(vi) sheets, hoops, strips and skelp both black and galvanised, hot and cold rolled, plain and corrugated, in all qualities, in straight lengths and in coil form, as rolled and in rivetted condition ;
(vii) plates both plain and chequered in all qualities ;
(viii) discs, rings, forgings and steel castings ;
(ix) tool, alloy and special steels of any of the above categories ;
(x) steel melting scrap in all forms including steel skull, turnings and borings ;
(xi) steel tubes both welded and seamless, of all diameters and lengths, including tube fittings ;
(xii) tin-plates, both hot dipped and electrolytic and tin free plates ;
(xiii) fish plate bars, bearing plate bars, crossing sleeper bars, fish plates, bearing plates, crossing sleepers and pressed steel sleepers, rails-heavy and light crane rails ;
(xiv) wheels, tyres, axles and wheels sets ;
(xv) wire rods and wires-rolled, drawn, galvanised, aluminised, tinned or coated such as by copper ;
(xvi) defective, rejects, cuttings or end pieces of any of the above categories ;
(v) jute, that is to say, the fibre extracted from plants belonging to the species Corchorus capsularis and Corchorus olitorius and the fibre known as mesta or bimli extracted from plants of the species Hibiscus cannabinus and Hibscus subdariffa – Var altissima and the fibre known as Sunn or Sunn-hemp extracted from plants of the species Crotalaria juncea whether baled or otherwise ;
(va) Liquefied petroleum gas for domestic use;
(vi) oilseeds, that is to say,-
(i) Groundnut or Peanut
(ii) Sesamum or Til
(iii) Cotton seed
(v) Rapeseed and Mustard-
(3) Jamba-Taramira (Eruca Satiya);
(4) Sarson, yellow and brown (Brassica campestris var sarson);
(5) Banarsi Rai or True Mustard (Brassica nigra);
(vi) Linseed (Linum usitatissimum);
(vii) Castor (Ricinus communis);
(viii) Coconut (i.e., Copra excluding tender coconuts) (cocosnucifera);
(ix) Sunflower (Helianthus annus);
(x) Nigar seed (Guizotia abyssinica);
(xi) Neem, vepa (Azadirachta indica);
(xii) Mahua, Illupai, Ippe (Madhuca indica M. Latifolia, Bassia, Latifolia and Madhuca longifolia syn. M. Longifolia) ;
(xiii) Karanja, Pongam, Honga (Pongamia pinnata syn. P. Glabra);
(xiv) Kusum (Schleichera oleosa, syn. S. Trijuga) ;
(xv) Punna, Undi (Calophyllum inophyllum) ;
(xvi) Kokum (Carcinia indica);
(xvii) Sal (Shorea robusta);
(xviii) Tung (Aleurites fordii and A. montana);
(xix) Red palm (Elaeis guinensis);
(xx) Safflower (Carthanus tinctorius);
(via) pulses, that is to say,-
(i) gram or gulab gram (Cicerarietinum L.) ;
(ii) tur or arhar (Cajanus cajan) ;
(iii) moong or green gram (Phaseolus aureus) ;
(iv) masur or lentil (Lens esculenta Moench, Lens culinaris Medic) ;
(v) urad or black gram (Phaseolus mungo) ;
(vi) moth (Phaseolus aconitifolius Jacq) ;
(vii) lakh or khesari (Lathyrus sativus L.) ;
(vii) man made fabrics
(viii) sugar and Khandsari Sugar.
(ix) un-manufactured tobacco and tobacco refuse, cigars and cheroots of tobacco, cigarettes and cigarillos of tobacco, other manufactured tobacco covered
(x) woven fabrics of wool
There have been many cases where certain items have been held as declared goods. Some of the goods which have been held as declared goods by the Supreme court and various High Courts are provided below:
CAST IRON CASTING: cast iron castings have been held as declared goods by the honurable Supreme court in Vasantham Foundry v. UOI- AIR 1995 SC 2400. In this case it was decided that cast iron castings in its basic rough form is cast iron and hence is declared goods.
GI PIPES, PIPES AND PIPE FITTINGS ARE DECLARED GOODS: GI pipes have been held as declared goods by sureme court in Gujarat Steel Tubes Ltd. v. State of kerala (1989) 74STC 176(SC) and also in Mahesh Enterprises v. State of AP (2000) 119 ATC 578 (AP HC DB).
Pipes and pipe fittings have been held as Declared Goods (1987) 65 STC 465 (All).
COAL ASH/COAL SLURRY- In Arif Transport v. CTO(1999) 116 STC 207(Karn HC) coal ash was held to be including Coal as well as In Chandrama coal products v. State of Bihar (1999) 115 STC 639(Pat HC DB) where the coal slurry and sludge is held to be a form of coal and held as declared goods.
Item (ia) states: Coal, including coke in all its form but excluding Charcoal. Thus all types of coke are covered under this category. Petroleum coke has also been held as declared goods in India Carbon Ltd. v. Supt of Taxes(1971)28 STC 603(SC).
RIM OF WHEEL IS DECLARED GOODS: Rim of Cycle wheel has been held as declared goods in Dewan Enterprises v. CST AIR 1996 SC 2029.
SCREW DIVERS, SAWS AND PICKAXES ARE DECLARED GOODS as they are tools as held in CST v. National Lock Stores (1996)101 STC 83 (MP HC DB)
SEWING THREAD IS DECLARED GOODS as it was held that sewing thread and cotton yarn are same thing in State of Tamilnadu v. R V Krishniah (1994) 92 STC 262 ( MAD HC DB)
STAINLESS STEEL TUBES AND WIRES ARE DECLARED GOODS held in Hindustan Wires Ltd. v. State of Tamilnadu(1992) 86 STC 1(MAD HC DB)
SUGAR IMPORTED FROM ABROAD- Sugar imported from outside India is also declared goods- Prime Impex v. ACCT (2002) 127 STC 23 (CAL HC DB).