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Report No. 61

Power of Parliament to formulate principles.- The above analysis shows the far-reaching changes made by the Sixth Constitutional Amendment in the structure of the sales tax system of the country and in the powers and jurisdiction of Parliament and State Legislatures with respect thereto. It was for the first time in our constitutional history that Parliament was empowered to formulate by law principles for determining when a sale or purchase of goods takes place in any of the following ways, that is to say:-

(a) where such sale or purchase takes place outside a state [Article 286(1)(a));

(b) where such sale or purchase takes place in the course of the import of the • goods into, or export of the goods out of, the territory of India [Article 286(1)(b));

(c) where such sale or purchase takes place in the course of inter-State trade or commerce [Article 269(3)].

[N.B.- It seems that the use of the word "when" in Article 269(3) and Article 286(2) and the use of the word "where" in entry 92A of the Union List or in Article 286(1), were not intended to signify any distinction and difference because such distinction and difference are not easy to discern in respect of the same subject-matter. It seems that these two different conjunctions "when" and "where" were used to signify the same situation.]

The object of these provisions was to make it clear that a State Legislature cannot make any law which may have the effect of extra-territorial operation, that is, operation beyond and outside the territory of the State. That a State Legislature has no such extra-territorial power of legislation is clear from the provisions of Article 245 and Article 246(3) of the Constitution. This however is not the case with Parliament in view of the specific provisions of Article 245(2). In this connection the words "for the whole or any part of a State" in Article 245(1) and the words "for such State or any part thereof" in Article 246(3) may be noted. The Law Commission in 1956 was invited by the Government of India to make recommendations relating to the formulation of principles in respect of the three matters specified above.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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