Report No. 61

2.14. Constitutional difficulty in widening the scope of sale-Consignment transactions.-

The proceeds of such taxes, in so far as they are attributable to the States, do not form part of the Consolidated Fund of India, and are assigned to the State in which the tax was collected1. When all these aspects are borne in mind, it will be realised that without a constitutional amendment widening the scope of the expression 'sale or purchase' wherever it occurs in the Constitution in the context of inter-State sale or purchase, confusion will result if consignment transactions are brought within the definition of 'sale' in the Central Sales Tax Act. Hence, if such transactions are to be taxed, it will be necessary to amend the Constitution in several places-e.g., Article 209, whereunder the proceeds are distributed to the States.

1. Section 9(3), Central Sales Tax Act, 1956.