Report No. 61
Intro.-5. Before 1956, there was a fourth limitation as to inter-State sales and purchases. After 1956, this limitation assumed the form of absence of a power to tax inter-State sale or purchase, and the power is now exclusively vested in the Parliament1.
The three limitations relate to
(i) tax on sales in the course of import or export;
(ii) tax on sales outside the State; and
(iii) tax on sale of essential goods.
The main purpose of the limitation regarding tax on sale or purchase in the course of import or export is to protect international trade from taxation by States. The main purpose of the limitation on the power of the States to tax sales or purchases outside the State is to prevent the imposition of an unduly heavy burden upon the consumer by multiple taxation upon a single transaction of sale2. The object of the third limitation-as to taxation of sale or purchase of essential goods-is obvious.
1. Constitution, Seventh Schedu'e, Union List, entry 92A.
2. Cf. Bengal Timber Trading Corporation v. C.S.T., AIR 1967 SC 1348 (1349): (1967) 2 SCR 547 on the old Article 286(1).