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Report No. 61

3.8. Importance of the Constitutional prohibition.-

Such a prohibition1 is based on one of those constitutional doctrines which form the heart of the federal concept. It is the basic need for the demarcation of the taxing power on transactions relating to commodities, that constitutes the spirit of the constitutional prohibition. Verbal controversies and questions of interpretation naturally arise on the formula that may be adopted to give effect to this spirit. But the essential and basic consideration is the one to which we have referred.

In the celebrated American case of Brown v. Maryland, (1827) 6 L Ed 675., Marshall, C.J. observed:-

"The constitutional prohibition on the States to lay a duty on imports, a prohibition which vast majority of them must feel an interest in preserving, may certainly come in conflict with the acknowledged power to tax persons and property within their territory. The power, and the restriction on it, though quite distinguishable when they do not approach each other, may yet, like the intervening colours between white and black, approach so nearly as to perplex the understanding, as colors perplex the vision in making the distinction between them. Yet the distinction exists, and must be marked as the cases arise.

Till they do arise, it might be premature to state any rule as being universal in its application. It is sufficient for the present to say, generally, that when the importer has so acted upon the thing imported that it has become incorporated and mixed up with the mass of property in the country, it has, perhaps, lost its distinctive character as an "import" and has become subject to the taxing power of the State; but while remaining the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports to escape the prohibition in the Constitution."

1. Para. 3.7, supra.

3.8A. Problems of interpretation.-

Problems of interpretation of such prohibitions are unavoidable. Clark, J. in State of Wisconsin v. J.C. Penny Co., observed as follows:

"that there is a 'need for clearing up the tangled undergrowth of past cases' with reference to the taxing power of the States is a concomitant to the negative approach resulting from a case-by-case resolution of 'the extremely limited restrictions that the Constitution placed upon the States."

"Commerce between the States having grown up like Topsy, the Congress meanwhile not having undertaken to regulate taxation of it, and the States having understandably persisted in their efforts to get some return for the substantial benefits they have afforded it, there is little wonder that there has been no end of cases testing out state tax levies. The resulting judicial application of constitutional principles to specific State statutes leaves much room for controversy and confusion, and little in the way of precise guides to the States in the exercise of their indispensable power of taxation.

This Court alone has handed down some three hundred full-dress opinions spread through slightly more than that number of reports. As was said in Miller Bros. Co. v. State of Maryland,2 the decisions have been not always clear, consistent or reconcilable. A few have been specifically over-ruled, while others no longer fully represent the present state of the law. From the quagmire there emerge, however, some firm peaks of decision which remain unquestioned." This shows the complexity of the question.

1. State of Wisconsin v. J.C. Penny Co., (1940) 311 US 435 (445).

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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