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Supreme Court 7-Judge Bench Upholds State Sales Tax Surcharge: S. Kodar (1974) Affirmed, Surcharge Is Not Tax on Tax or Tax on Income (2026 INSC 1192)

In a historic 7-Judge Constitution Bench verdict, the Supreme Court of India in Arjun Flour Mills v. State of Odisha (2026 INSC 1192) unanimously affirmed the landmark ratio of S. Kodar v. State of Kerala (1974). The Bench ruled that a State sales tax surcharge or additional sales tax calculated as a percentage of tax payable is an enhancement of the rate of tax under Entry 54 of List II, and not an unconstitutional tax on tax or tax on dealer income.

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