Declared goods protection depends on satisfying the statutory definition of sugar before State sales tax can be levied.

Lisa sugar qualifies as declared goods under section 14(viii) of the Central Sales Tax Act only if it satisfies the statutory definition of sugar in tariff item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, namely a sugar form with sucrose content above 90 per cent on the prescribed dry basis. That factual identity must be determined first by the assessing authority. If the commodity so qualifies, section 15 of the Central Sales Tax Act restricts the State levy and turnover cannot be taxed under the Karnataka Sales Tax Act. The earlier exemption ruling did not decide this question. The assessment was quashed and the matter remitted for fresh factual determination.

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Issues: Whether lisa sugar is declared goods under section 14(viii) of the Central Sales Tax Act and, if so, whether tax can be levied on its turnover under the Karnataka Sales Tax Act.

Analysis: Sugar is declared goods only if the commodity answers the statutory definition of sugar in tariff item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, namely, a form of sugar having sucrose content of more than 90 per cent on the prescribed dry basis. The earlier decision dealing with exemption under entry 31B of the Fifth Schedule did not decide whether lisa sugar was declared goods or whether the turnover could be taxed under the State Act. The question whether lisa sugar satisfies the statutory definition of sugar was therefore one of fact to be determined by the assessing authority. If it does, section 15 of the Central Sales Tax Act restricts the State levy and the commodity cannot be taxed under section 5(1) of the Karnataka Sales Tax Act.

Conclusion: Lisa sugar would be declared goods under section 14(viii) of the Central Sales Tax Act if it is sugar as defined in tariff item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, and in that event no tax is leviable on its turnover under the State Act. The assessment on lisa sugar was therefore quashed and the matter remitted for a fresh factual determination.

Ratio Decidendi: A commodity is entitled to the protection attached to declared goods only when it squarely answers the statutory definition of the relevant entry, and the taxing authority must first determine that factual identity before levying State tax.

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