Question 81 from UPSC CSE 2014 - Polity

Question

The sales tax you pay while purchasing a toothpaste is a

IASCODEX · Accepted Answer

Correct Option: D. Tax imposed and collected by the State Government

Strategy: Identify sales tax on toothpaste as a tax on the sale of goods within a state. Recognize this falls under the State List (Entry 54), granting state governments exclusive authority to impose and collect it. Conclude that the central government has no role, thus eliminating all options except the one assigning full authority to the states.

Key Info: **Pre-GST Sales Tax in India**
- Sales tax was a levy on the sale or purchase of goods within a state.
- **Constitutional Basis:** The power to levy this tax was assigned to States under Entry 54 of the State List in the Constitution's Seventh Schedule.
- **State Authority:** States had the exclusive power to impose and collect sales tax on goods sold within their boundaries, with the Central Government having no authority over such intra-state sales.
- **Inter-state Exception:** The Central Government could impose a Central Sales Tax (CST) on inter-state trade, but this did not apply to local retail sales like toothpaste.
- **Post-GST Context:** Most forms of sales tax were subsumed by the Goods and Services Tax (GST) implemented in July 2017. Prior to GST, however, sales tax on items like toothpaste was solely a state subject.
- **Legal Framework:** The governing laws were the respective State Sales Tax Acts, enacted under constitutional authority.

IASCODEX · Answer

Option A: Tax imposed by the Central Government

IASCODEX · Answer

Option B: Tax imposed by the Central Government but collected by the State Government

IASCODEX · Answer

Option C: Tax imposed by the State Government but collected by the Central Government