Constitution Section 286 — Restrictions as to imposition of tax on the sale or purchase of goods

Part XII — FINANCE, PROPERTY, CONTRACTS AND SUITS — Miscellaneous Financial Provisions

Constitutional

Summary

A state government cannot create a law that taxes the supply of goods, services, or both, if that supply happens outside the state, or if it happens during the import of goods or services into India, or during their export out of India. The central Parliament can make a law to set the rules for deciding when a supply falls into one of these categories.

Official Text

(1) No law of a State shall impose, or authorise the imposition of, a tax on the supply of goods or of services or both, where such supply takes place—

(a) outside the State; or

(b) in the course of the import of the goods or services or bothinto, or export of the goods or services or both out of, the territory of India. *

(2) Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1).

(3) *