The Supreme Court reaffirms a 1974 Constitution Bench ruling allowing states to levy additional sales tax or surcharges calculated as a percentage of existing sales tax. In a unanimous decision by a seven-judge Bench, the court declines to revisit the underlying legal question, describing a long-pending reference as effectively “academic” due to later legislative changes and the shift to the GST regime.
The ruling follows a challenge that asked whether a state surcharge on dealers’ sales tax amounted to impermissible income taxation reserved for Parliament. The court holds that the earlier “S Kodar vs State of Kerala” framework continues to govern states’ legislative competence, emphasizing that a sales-tax-based surcharge is treated as an adjustment to the sales tax rate rather than a tax on dealers’ income. While the same core decision appears across outlets, coverage differs mainly in how much background each chooses to include about the specific challenged provision and the “academic” nature of the reference.
