Report No. 61
What are described sometimes as "consignment transfers" are not taxable as sales under the present law. The Union can tax them under the residuary power, but even if such a tax is levied, the proceeds of the tax cannot be distributed to the States without amending Articles 269(1)(g) and 269(3) of the Constitution. Therefore, if, as a matter of policy, consignments are to be included in the Central Sales Tax Act, it will be necessary1 first to amend Articles 269(1)(g) and 269(3) of the Constitution, by adding an Explanation to that article, somewhat on the following lines2:-
"Explanation.-For the purpose of this article, the expression "sale or purchase" includes a consignment of goods occasioning their movement from one place to another, by a dealer to any other place of his business or to his agent or principal."3
1. There are other provisions of the Constitution using the expression "sale", but they do not seem to require amendment in the present context.
2. This is not intended to be a precise draft.
3. After the proposed amendment of the Constitution, the desired amendments in Central Sales Tax Act could be made.