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Report No. 61

2.34. The need to clarify the constitutional basis.-

An amendment to expand the meaning of 'sale' (to cover consignment) is considered necessary because since section 9(3) of the Central Sales Tax Act has, for its power and origin, Article 269(2) of the Constitution, it is desirable that the constitutional provision itself should be unambiguous, so as to authorise the distribution of proceeds of a tax on consignments under section 9(3) read with the definition of "sale". The exclusive object of entry 92A (in the Union List) was to confer, on the Union, the power to levy a tax on inter-State transactions of sale or purchase of goods. These transactions were, before the insertion of that article, regarded (according to an interpretation subsequently found to be erroneous) as falling within the power of the States. By a new entry-entry 92A-that power was in 1956 vested in the Union, but the proceeds were, by an amendment of Article 269 which was made simultaneously, directed to be distributed to the States.

2.35. And since, in State List, entry 54 "sale" has been narrowly construed, it is very likely that in Article 269 and Union List, entry 92A, also, it will be narrowly construed, particularly having regard to the close relationship of Article 269(3) to entry 92A.

2.36. In common parlance 'sale' does not include consignments.-

Consignment of goods without passing of property is not, even in popular language, equated with "sale". Thus, both the legal and popular meanings of 'sale' exclude consignments without transfer of property.

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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