Cess levied as increment to sales tax remains within State’s scope, says Supreme Court

NEW DELHI: The Supreme Court held on Wednesday (November 4, 2026) that an additional tax levied by a State legislature on the sale or purchase of goods will not fall outside the State’s competence. A seven-judge Bench confirmed a 1975 ruling (S. Kodar versus State of Kerala) that a cess levied as an increment to an existing sales tax has to be judged in the same way as the principal tax. Public Accounts Committee flags failure to transfer ₹9,222 crore in cess collections to designated reserve funds Public Accounts Committee flags failure to transfer ₹9,222 crore in cess collections to designated reserve funds Members question the Finance Ministry’s explanation; panel chief K.C. Venugopal says cess proceeds must not be used to finance fiscal deficit instead of their intended purpose Public Accounts Committee flags failure to transfer ₹9,222 crore in cess collections to designated reserve funds storyline 1 “S.