With reference to the Supreme Court's ruling on the 1974 S. Kodar vs State of Kerala case, consider the following statements: 1. The Court declined a fresh adjudication because the GST law has replaced the challenged statutory provisions. 2. The 1974 ruling upheld the power of States to impose additional sales tax or surcharges. 3. The Court ruled that an additional tax computed as a percentage of sales tax is a separate levy from the sales tax rate. Which of the statements given above is/are correct?

The Supreme Court ruled on November 4, 2026, that a 1974

GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Prelims + Mains· 4 November 2026

Fiscal Federalism and legislative competence: a key GS3 topic regarding State autonomy and GST.

Why in news

The Supreme Court ruled that a 1974 judgment upholding the power of States to impose additional sales tax remains valid, declaring a fresh reference on the issue academic due to the implementation of the GST law.

Background

A seven-judge Constitution Bench led by CJI Surya Kant ruled on November 4, 2026, that the 1974 S. Kodar vs State of Kerala ruling still holds. The Court declined a fresh adjudication because the Goods and Services Tax (GST) law has replaced the challenged statutory provisions.

Facts for Prelims

FactThe 1974 S. Kodar vs State of Kerala ruling upheld the States' power to impose additional sales tax or surcharges.
FactThe reference arose from a challenge to Section 5A of the Orissa Sales Tax Act, 1947.
FactThe Court ruled that an additional tax computed as a percentage of sales tax is an enhancement of the rate of sales tax.

Prelims practice question

With reference to the Supreme Court's ruling on the 1974 S. Kodar vs State of Kerala case, consider the following statements:

The Court declined a fresh adjudication because the GST law has replaced the challenged statutory provisions.
The 1974 ruling upheld the power of States to impose additional sales tax or surcharges.
The Court ruled that an additional tax computed as a percentage of sales tax is a separate levy from the sales tax rate.

Which of the statements given above is/are correct?

(a)2 only
(b)3 only
(c)1 and 2 only
(d)1, 2 and 3

Show answer

Answer: (c) 1 and 2 only — Statements 1 and 2 are correct. Statement 3 is incorrect: The Court ruled it is an enhancement of the rate of sales tax.

For Mains

Q. Discuss the impact of the Goods and Services Tax (GST) on the fiscal autonomy of State legislatures regarding the imposition of surcharges and additional taxes.

Dimensions to cover in your answer

Fiscal Federalism: Balancing State rights to generate revenue with the unified tax structure of GST.
Judicial Precedent: The transition from the S. Kodar ruling to the current GST regime and its impact on legislative competence.

Keywords: Fiscal Federalism · GST · Legislative Competence · Judicial Precedent · Surcharge · State Autonomy

Read the full news →Report a mistake in this note How notes are made Source: The Hindu ↗Also: GS2 · Judiciary & landmark judgments Also: GS2 · Constitution, amendments & basic structure

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