Meaning of Deemed Sale under CST

What is Deemed Sale under CST ?

There are certain transactions which are deemed or defined as ‘sales’ under CST Act, which however may not amount to ‘sales’, strictly as per Sale of Goods Act.

To avoid the conflict of deeming fiction, the definition of ‘tax on sale or purchase of goods’ as contained in Article 366(29A) provides for taxing these sales, i.e. ‘deemed sales’.  The six categories of deemed sales as defined in article 366(29A) of the Constitution are:

a) Compulsory sale

Transfer of property, otherwise than in pursuance of a contract, for cash, deferred payment or valuable consideration is ‘sale’. Thus, any transfer of property for valuable consideration will be taxable, even if there is no contract.

b) Goods involved in works contract

‘Sale’ includes a transfer of property in goods (whether as goods or in some other form) involved in execution of a works contract is taxable. Thus, Central Sales Tax can be levied on goods involved in works contract.

c) Hire purchases is ‘sale’

‘Sale’ includes a delivery of goods on hire-purchase or any system of payment by installments. [It was ‘sale’ under CST Act even prior to amendment of definition of ‘sale’ w.e.f. 11/05/2002].

d) Sale to member of unincorporated association or body or persons

‘Sale’ includes supply of goods by an unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

e) Transfer of right to use

‘Sale’ includes a transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration – In common parlance, this transaction is termed as ‘leasing’ or ‘hire’.

f) Sale of food articles

‘Sale’ includes supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration.


  1. Ram Chauhan Sep 28, 2015
    • Pawan Gupta Sep 28, 2015