In Brief
The Supreme Court examined whether sales tax exemptions granted to industrial units in the unified State of Madhya Pradesh before its bifurcation into Madhya Pradesh and Chhattisgarh would continue to apply to inter-state transactions between the two successor states. The Court held that while the Reorganisation Act ensured continuity of pre-existing laws in each successor state, the deeming fiction did not extend to treating inter-state transactions as intra-state transactions. Consequently, industrial units could no longer claim exemption benefits granted for intra-state trade when conducting business with the other state. The Court overruled the contrary position in Swarn Rekha Cokes case, emphasising that the separate constitutional and political existence of the two successor states must be fully respected. Appeals by the states were allowed while those by private parties were dismissed.
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