Restrictions on powers of taxation

Restrictions on powers of taxation :

Restrictions on power of State Government on imposition of tax on supply of goods and services are provided in Article 286 of Constitution of India, as follows :

♦ State Government cannot impose tax on supply of goods or services or both during imports or exports; or tax on sale outside the State. [Article 286(1) of Constitution of India] [The words in italics were as follows upto 16-9-2016 – ‘sale or purchase’]

♦ Parliament is authorised to formulate principles for determining when a sale or purchase takes place (a) outside the State (b) in the course of import and export. [Article 286(2) of Constitution of India]

♦ Omitted [Till 16-9-2016 the entry was as follows] – Parliament can place restrictions on tax on sale or purchase of goods declared as goods of special importance and State Government can tax such declared goods only subject to these restrictions [Article 286(3) of Constitution of India].