National News

Supreme Court on Additional Sales Tax

November 13 , 2026 17 hrs 0 min 25 0

The Supreme Court's seven-judge Constitution Bench disposed of the nearly three-decade-old Arjun Flour Mills reference concerning States’ power to levy additional sales tax.
The Court clarified that an additional tax or surcharge calculated as a percentage of existing sales tax is an enhancement of the sales tax rate and falls under the States’ powers under Entry 54 of the State List (Seventh Schedule).
The Court held that the reference had become academic because the Goods and Services Tax (GST) regime replaced the earlier tax laws in 2017.
The case arose from a challenge to the Odisha Sales Tax Act, 1947, which imposed additional tax of 10% and 15% on dealers based on their annual turnover.
The reference was made in 1999 due to differences between earlier Supreme Court judgments, including S. Kodar v. State of Kerala (1974) and India Cement v. State of Tamil Nadu (1990).
Justice K.V. Viswanathan separately held that the S. Kodar judgment remains valid and that additional sales tax is not a tax on dealers’ income.