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Report No. 30

28. Bengal Immunity case.-

In the meantime, the Supreme Court, in a later decisions 1 held, that no State could tax a transaction of sale of goods which took place in the course of inter-State trade or commerce. To this extent, it overruled the decision in the State of Bombay v. United Motors, 1953 SCR 1069: AIR 1953 SC 252: 4 STC 133. But, then, this decision led to temporary complications, as sales-tax on inter-State trade had already been realised by various States, relying on the decision in the State of Bombay v. United Motors. So far as the temporary complications were concerned, the matter was resolved by the promulgation by the President of an Ordinance 2, followed by an Act of Parliament 3. The validity of the Act was upheld by the Supreme Court 4.

1. Bengal Immunity Co. v. State of Bihar, (1955) 2 SCR 603: AIR 1955 SC 661: 6 STC 446.

2. Sales Tax Laws Validation Ordinance, 1956 (3 of 1956).

3. Sales Tax Laws Validation Act, 1956 (7 of 1956).

4. Sundararamier & Co. v. State of Andhra Pradesh, 1953 SCR 1422: 9 STC 298: AIR 1958 SC 468 (479).



Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back




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