Presidential continuance order upheld State sales tax levy despite Article 286(2) restriction on inter-State trade sales.

Article 286(2) of the Constitution, as it stood before the Sixth Amendment, barred State taxation of sales in the course of inter-State trade or commerce, but the presidential proviso allowed continuance of taxes lawfully levied immediately before commencement of the Constitution until 31 March 1951. The Sales Tax Continuance Order, 1950, issued under that proviso, preserved the Bihar sales tax levy for the relevant period despite the constitutional restriction. The challenge based on where title passed under the Bihar Sales Tax Act involved factual matters and an issue beyond the reference, so it was not examined on merits.

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Issues: Whether sales tax could be lawfully levied on goods delivered for consumption in Bihar for the relevant assessment period in view of Article 286(2) of the Constitution and the Sales Tax Continuance Order, 1950.

Analysis: Article 286(2), as it stood before the Sixth Amendment, imposed a prohibition on State taxation of sales taking place in the course of inter-State trade or commerce, but the proviso empowered the President to direct continuance of taxes lawfully levied immediately before the commencement of the Constitution until 31 March 1951. The Sales Tax Continuance Order, 1950, issued under that proviso, continued such levy notwithstanding the constitutional prohibition. The attempted challenge based on the place where title passed under the Bihar Sales Tax Act raised factual questions and a point beyond the scope of the reference, and was therefore not examined on merits.

Conclusion: The sales tax levy for the period in question was valid and the question was answered against the assessee and in favour of the State.

Final Conclusion: The reference was answered by sustaining the State's power to tax the relevant sales, and the assessee's constitutional challenge failed.

Ratio Decidendi: Where Article 286(2) is supplemented by a presidential continuance order issued under its proviso, a State tax lawfully levied immediately before commencement of the Constitution may continue to operate until the date fixed by the Order notwithstanding the constitutional restriction.

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