Sales tax has been _one of the most important sources of rewnue· for the States. The framers of the Constitution realised that this power of taxation was being exercised by the States in a manner prejudicial to the free flow of trade and commerce throughout the country as each State, rel}ing upon some ingredient of sale which had a terri" torial nexus; le\ied the tax \hich led to multiple taxation of interstate sales. This multiple taxation increased the burden on the consuming public. The Constitution-makers, therefore, \bile retaining sales tax as- a source of revenue for the States, imposed restrictions on the taxing power of the States. Article 286 of the Constitution was one of the articles enacted for that purpose. As framed, the article sought to put restraints upon the legislative power of the States ; but the language in which the article and particularly the Explanation was couched, instead of clarifying the intention of the Constituent Assembly, only darkened it. The scope of article 286 was considered by this Court in Tlze State of Bombay v. United J\Jotors (h1dia) Ltd. (1) in an appeal to this Court in which the validity of the provisions of the Bombay Sales Tax Act, 1952; was challenged. _The majority of the judges who heard the appeal held that article 286(l)(a) prohibited taxation of sales or purchases involving inter-State clements by all States except the State in which the goods were actually delivered for the purpose of consumption therein and that the effect of the Expla- nation thereto \Vas to conyert inter-State transactions into intra- State transactions and to remove them from the operation of clause 2. This interpretation of article 286 was not accepted by a larger Bench of this Court which heard and. decided Tlze Bengal Immunity Company Limited v. The State of Bihar and Otlzers(2) . . That case held that the ban imposed by article 286 of the Comti1u1ion on the taxing powers of the States were independent and separate and each one of them' had to be got over before. a State legislature could impose tax on transactions of sale or purchase of goods. The case further held that the Explanation to article 286(l)(a) determined by the legal fiction created therein the situs of the sale in the case of transactions coming within that category and that once 'it is determined by the application of the Explanation that a transaction -is outside the State, it followed that the State, with reference to which the transaction can thus be predicated to be outside it, can never tax the transaction. The Constitution was thereafter amended, Expla. nation I of article 286 was deleted and clauses (2) and (3) thereto were altered by the amendment. Simultaneously, item 92A was incorporated in· List I of the Seventh Schedule authorising Parliament to legislate (or Je,ying tax on the sale or purchase of goods other than newspapers, where such sale or purchase took place in the course of inter-State trade or commerce and item 54 of List JI was amended to . exclude taxation of inter-State sales from the competence of the State legislatures. -Article 269, clause l(g) was also amended by clause 3 _ to that artide and after the amendment it reads :
