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) unmanufactured 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 -TMI - 42484 – (SUPREME COURT OF INDIA) 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 2000 -TMI - 46401 – (HIGH COURT AT CALCUTTA).
RESTRICTIONS ON STATE TAXATION ON DECLARED GOODS
1. Tax on Declared Goods cannot exceed 4% within the state (Section 15(a)
2. Reimbursement of local tax if declared goods are sold interstate: It has been provided u/s 15(b) of CST Act that if the Declared goods which are purchased from within a state or in other words on which intra state tax i.e local tax has been paid and those Declared goods are sold interstate then the local tax paid on such goods shall be reimbursed to the person making such interstate sale.
For obtaining the reimbursement following conditions must be fulfilled:
a. The Interstate sale of goods must be in the same form
b. If interstate sale of goods are exempt from tax, no refund of tax paid on Intra state sale is available.
c. The word used is Reimbursement Thus the tax on local sale must have been paid.
It means that no adjustment of local tax paid at the time of purchase of declared goods is available against the CST payable on inter state sale of such goods. Since the word used is Reimbursement and not adjustment. Assume that a person purchases declared goods in the state for Rs 10400 on which he has paid local tax @ 4% Rs. 400. Later on he sells such goods in the inter state sale for Rs. 11000 and charge CST @ 4% i.e RS. 440. Now he cannot claim adjustment of the tax paid at local leval against the CST to claim that he will pay only RS. 40. The person will have to deposit CST of Rs 440 before claiming Reimbursement of the local tax. as it has been held in Dhanji Kalyanji & co. v. State of Karnatka (1978) 42 STC 272.
This is because payment of CST is condition precedent in order to claim Reimbursement- Rallis India Ltd. v. State of A.P. (1980) 45 STC 456(SC)
In Tata Iron & Steel co Ltd. v UOI 2000 AIR SCW 4514, it was held that reimbursement presupposes previous payment.
3. Before Taxation laws (Ammendment) Act 2007 section 8(2)(a) of the CST Act 1956 provided that if declared goods are sold to unregistered dealer in the cource of interstate sale , the CST rate will be twice the rate applicable in case of local sales. But after the ammendment in section 8 of CST in year 2007 the sub section 2 of section 8 has been replaced.
Now the state rate of tax is applicable to the turnover of any dealer in so far as the turnover or any part thereof relates to the sale of goods in the cource of interstate trade or commerce not falling within Section 8(1). Now section 8(2) doesnot make any difference between the Declared goods and other goods so far the rate of CST is concerned while making interstate sale to the unregistered dealer outside the ambit of section 8(1).
SPECIAL PROVISIONS ABOUT PADDY & PULSES: If Paddy is taxed within state and rice is also taxed then tax paid on Paddy should be given set off while levying tax on rice (Section 15(c). It means that the adjustment of local tax paid on paddy at the time of purchase can be set off against the tax payable on sale of Rice produced from the paddy.
If the rice produced from the paddy purchased is to be exported then the paddy and the rice shall be treated as same goods for the purpose of section 5(3) of CST Act. It means the Paddy can be purchased without payment of local tax if the rice produced from it is to be exported out of India.
Each of the Pulses whether whole or seperated and whether with or without husk shall be treated as a single commodity for the purpose of levy of tax under state law [Section 15(d)]