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Showing contexts for: article 286 in M/S. Seil Energy India Limited vs Deputy on 31 December, 2025Matching Fragments
Consideration of the Court:
20. The power to levy tax, on sale of goods, was conferred on the state legislatures, by way of entry 54 of the 2nd list in the Schedule VII of the Constitution. However, Article 286 (1) of the Constitution placed certain restrictions on the power to tax sales taking place outside the State or those involved in export of goods and other transactions. Further, Article 286 (2) enabled Parliament to formulate the principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Article 286 (1). Article 286, as it originally stood, reads as follows:
RRR,J & SS,J W.P.No.21938 of 2024 & batch
22. At this stage, Article 286 was amended, by way of the 6th Amendment Act. Under this Amendment Act, the explanation to Article 286 (1) was deleted and Article 286 (2) was substituted with the following:
―(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1)‖
31. The aforesaid judgments were rendered in the context of Article 286 read with Section 5 of the CST Act. However, this Court is called upon to decide this case on the basis of the provisions, in the IGST Act. Though the GST regime seeks to tax supply of goods or services, Section 5 of the GST (1966) 17 STC 473 (1979) 2 SCC 242 (2010) 34 VST 509 (SC) RRR,J & SS,J W.P.No.21938 of 2024 & batch Act defines Supply of Goods to include Sale of Goods. Any supply of goods , in the nature of sale of goods, claiming exemption on the ground of being export of goods, would have to meet the requirements of Article 286 (1) (a) or (1) (b). Apart from this, such supply/sale would have to meet the requirements formulated by Parliament, under the enabling provision of Article 286(2). Such formulation is contained in Section 2 (5) and section 16 of the IGST Act. ―Zero rated supply‖ is defined, in Section 16 of the Integrated Goods and Services Tax Act, 2017 in the following manner:
35. The supply of electricity, in the present case, would be a sale and Article 286 would be applicable. This would mean that any sale of electricity, in the course of export would be an export supply. However, one difference between the CST regime and the IGST regime is that, the principles formulated, in section 5 of the CST Act would not be applicable and only such principles, as can be discerned from a reading of Article 286 and Section 2 (5) and 16 of the IGST Act would have to be applied. Section 2 (5) of the IGST Act, read with Article 286 (1) (b) would mean that all supply of goods, in the course of taking goods out of India, would be export of goods. The further requirement, of Section 5 (2) of the CST Act, that only such sales which occasion the movement of goods, would amount to export sales, would not apply. All the judgments, cited above, except State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory, (1953) 1 SCC 826 : (1953) 4 STC 205 : 1953 SCC OnLine SC 89 at page 844were based on an interpretation of Section 5 of the CST Act. It is only in State of Travancore-Cochin v.