In Brief
The Supreme Court held that when a State is bifurcated under a Reorganisation Act, industrial units granted sales tax exemption in the unified State cannot claim exemption benefits for inter-state sales between the two new States. Although pre-bifurcation laws continue to apply within each successor State's boundaries, exemptions granted for intra-state transactions do not extend to inter-state transactions created by the bifurcation. The Court overruled its earlier judgment in Swarn Rekha Cokes, clarifying that the deeming fiction in the Reorganisation Act preserves continuity of laws within territorial limits but does not prevent the legal creation of separate States or convert inter-state commerce into intra-state commerce. The Court allowed appeals by the States (Madhya Pradesh and Chhattisgarh) and dismissed appeals by the private parties."
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