269. Taxes levied and collected by the Union but assigned to the States
(1)Taxes on the sales or purchase of goods and taxes on the consignment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the Slates on or after the 1st day of April, 1996 in the matter provided in clause (2).Explanation--For the purposes of this clause,--(a)the expression "taxes on the sale or purchase of goods" shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce;(b)the expression "taxes on the consignment of goods" shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment lakes place in the course of inter-State trade or commerce.(2)The net proceeds in any financial year of any such tax, except in so far as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that tax is leviable in that year, and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law.[In article 269 of the Constitution, for clauses (1) and (2), the following clauses shall be substituted through Constitution (Eightieth Amendment) Act, 2000][The Constitution (Eightieth Amendment) Act, 2000, aims to implement the Tenth Finance Commission's recommendation to streamline the tax systems by collecting and distributing all taxes among the states and the federal government. Under the new scheme for devolution of revenue between the states and the Union, the states will receive grants instead of income taxes on railway passenger fares and twenty-six percent of the gross proceeds of Union taxes and duties instead of their current share of income tax, excise duties, and special excise duties.Also Refer](3)Parliament may by law formulate principles for determining when a sale or purchase of, or consignment of, goods takes place in the course of inter-State or commerce.[Editorial comment- The Constitution (Sixth Amendment) Act, 1956, it amendmended in Article 269 where the interstate selling of commodities other than newspapers is covered by new Article 269(1)(g). Clause (3) specifies that Parliament must determine what forms an interstate sale. Important Verdict: Bengal Immunity Co. Ltd. vs State Of Bihar And Ors , The State Of Bombay And Another vs The United Motors (India)Ltd & Also Refer ][Editorial comment- The Constitution (Forty-Sixth Amendment) Act, 1982, this amendment modifies articles 269 where clause (1) was changed. This is done in order for the States to receive the tax assessed on the consignment of commodities through inter-state trade or commerce. A change is also suggested for that article’s clause (3). This is done to allow Parliament to establish legal guidelines for identifying when a consignment of commodities occurs during inter-state trade or commerce.Also Refer]
