Supreme Court Closes Legacy Sales Tax Surcharge Reference in Arjun Flour Mills
Court category: Supreme Court
Court / details: Supreme Court of India
Location: India
A seven-judge Bench closed a reference on pre-GST sales tax surcharges and directed regular Benches to decide the individual disputes.
A seven-judge Bench closed a reference on pre-GST sales tax surcharges and directed regular Benches to decide the individual disputes.
Case reference — Arjun Flour Mills v. State of Odisha Finance Department Secretary and others, 2026 INSC 1192, Civil Appeal No. 8763 of 1994 and connected matters, 4 November 2026, seven-judge Constitution Bench
How the issue reached the Constitution Bench
The lead appeal challenged a surcharge under the former Orissa Sales Tax Act. The reference raised a question about State legislative competence under the pre-GST constitutional framework. Tamil Nadu’s additional sales tax precedent in S. Kodar was central to that question.
Why the reference was closed
The Court found that the perceived conflict with the earlier authority no longer justified a larger-Bench ruling. S. Kodar continues to govern the competence issue for the impugned surcharges. Under that precedent, an additional levy calculated as a percentage of sales tax payable was treated as an increase in the rate of sales tax under the former Entry 54.
What remains for regular Benches
The Court left individual assessment disputes and consequential relief open. It also reserved distinct questions concerning exemptions and the Punjab social security cess. The judgment concerns legacy levies and gives no new authority to impose a surcharge under the current GST regime.
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