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Report No. 61

3.6. Position under the Constitution.-

The Constitution has dealt with the matter by an express and elaborate provision. Broadly speaking, it not only prohibits taxation by the States of a sale1 outside the State, but also prohibits taxation of a sale in the course of import or export-or in inter-State trade or commerce. This provision is to be found in Article 286(1).

1. For brevity, " Sale is used in the above discussion to include purcahse.

3.7. Under Article 286(1)(b) of the Constitution, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods 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." The principal object of the prohibition is to protect international trade.

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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