Article 269 of the Costitution of India with Case law
🔹 Article 269 of the Constitution of India – Taxes Levied and Collected by the Union but Assigned to the States
📘 Text of Article 269
Article 269(1):
Taxes on the sale or purchase of goods (except those in the course of inter-State trade or commerce) shall be levied and collected by the Government of India, but shall be assigned to the States in the manner prescribed by Parliament.
Article 269(2):
Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce.
🧾 Key Features of Article 269
| Feature | Description |
|---|---|
| Type of Tax | Taxes on inter-State sale or purchase of goods (before GST) |
| Levy & Collection | By the Union Government |
| Distribution | Assigned to States from where the transaction originates |
| Law-making Power | Parliament has the power to determine principles of inter-State trade |
| Pre-GST Relevance | Related to Central Sales Tax (CST) |
| Post-GST Context | Largely replaced by GST system, though principle of distribution remains relevant under Article 269A |
📜 Background
Before the introduction of the Goods and Services Tax (GST) in 2017, Article 269 governed the Central Sales Tax (CST) regime. With the enactment of the Constitution (101st Amendment) Act, 2016, Article 269A was inserted for IGST (Integrated GST) to deal with inter-State supplies.
⚖️ Important Case Laws on Article 269
🔹 State of Bombay v. United Motors (India) Ltd., AIR 1953 SC 252
Facts: Whether a State could tax sales that occurred in inter-State trade.
Held: Only Parliament has the power to levy taxes on inter-State sales, and such taxes must be assigned to States.
Relevance: Affirmed that States cannot unilaterally impose tax on inter-State trade; it falls under Article 269.
🔹 Bengal Immunity Co. v. State of Bihar, AIR 1955 SC 661
Facts: Challenge to State legislation taxing inter-State sales.
Held: Inter-State trade and commerce fall exclusively under the Union’s legislative domain.
Relevance: Reinforced the scope and intent of Article 269 – to prevent multiple taxation and promote free trade across states.
🔹 Oil and Natural Gas Commission v. Collector of Central Excise, (1992) Supp (2) SCC 432
Relevance: Clarified the interplay of taxing powers between Centre and States and the constitutional limits under Article 269.
🔹 Tata Iron & Steel Co. Ltd. v. State of Bihar, AIR 1958 SC 452
Facts: Interpretation of inter-State sales and the scope of CST.
Held: Provided a test to determine what qualifies as an inter-State sale under Article 269.
Importance: Influenced the Central Sales Tax Act, 1956.
📌 Impact of GST & Article 269A
| Article | Subject | Status |
|---|---|---|
| 269 | CST on inter-State sales (pre-GST) | Substantially redundant after GST |
| 269A | IGST (post-GST inter-State tax) | Currently applicable |
| 270 | Distribution of GST revenues | Active and relevant |
📝 Summary Table
| Clause | Topic | Description |
|---|---|---|
| 269(1) | Inter-State sale tax | Union levies, States receive proceeds |
| 269(2) | Principles for inter-State sale | Defined by Parliament by law |
| Post-GST | Replaced by Article 269A | IGST mechanism introduced |
✅ Conclusion
Article 269 was designed to balance revenue interests between the Centre and the States for inter-State commerce, ensuring uniform taxation. Post-GST, its functional role has been taken over by Article 269A, though it remains on the statute book for any residual cases under CST.
RELATED Blog
0 comments