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Report No. 61

3.5. Other decisions of the Supreme Court.-

It has been held by the Supreme Court in a large number of cases1 that under the Government of India Act, 1935 the Provincial Legislature was competent to enact a law for levying sales tax acting on the principles of territorial nexus, i.e., the province could fix upon one or more ingredients of sale; and make it the foundation for imposing liability for sales tax. The position is, however, substantially different under the Constitution. Even if a sale is inside the State-and therefore not subject to the ban under Article 286(1)(a)-it cannot be taxed by the States if it falls within either of the other two bans prescribed in Article 286.

1. (a) Popatlal Shah v. State of Madras, AIR 1953 SC 274: 1953 SCR 677.

(b) Tata Iron & Steel Co. Ltd. v. State of Bihar, (1968) 9 STC 267: AIR 1958 SC 452: 1958 SCR 1365;

(c) Bharat Sugar Mills Ltd. v. State of Bihar, (1960) 11 STC 793: AIR 1961 SC 1183;

(d) Tikaram & Sons Ltd. v. Commissioner of Sales Tax, (1968) 22 STC 308: AIR 1968 SC 1286;

(e) Anwar Khan Mahboob v. Commissioner of Sales Tax, (1970) 26 STC 381 (383): AIR 1970 SC 1756.

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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