Article 269 of CoI : Article 269: Taxes levied and collected by the Union but assigned to the States.

Explanation using Example

Example 1:

Imagine a company named "ABC Electronics" based in Maharashtra sells a large batch of smartphones to a retailer in Karnataka. The sale of these smartphones is considered an inter-State sale because it involves the transfer of goods from one state to another. According to Article 269, the tax on this sale will be levied and collected by the Government of India. However, the revenue generated from this tax will not be kept by the central government. Instead, it will be assigned to the states involved—in this case, Maharashtra and Karnataka—based on principles formulated by Parliament.

Example 2:

Consider a scenario where a textile manufacturer in Gujarat sends a consignment of fabrics to its own warehouse in Tamil Nadu. This consignment is also an inter-State transaction. The tax on this consignment will be levied and collected by the Government of India. However, the net proceeds from this tax will be distributed to the states involved, Gujarat and Tamil Nadu, rather than being part of the Consolidated Fund of India. The distribution will follow principles set by Parliament to ensure fair allocation between the states.

Example 3:

A company named "Fresh Fruits Ltd." in Punjab sells a large quantity of apples to a distributor in Delhi. This transaction is an inter-State sale. The tax on this sale will be collected by the central government. However, the revenue from this tax will be assigned to Punjab and Delhi. The exact distribution of the tax revenue between these states will be determined by principles laid out by Parliament, ensuring that both states receive their fair share of the tax proceeds.

Example 4:

A logistics company in West Bengal sends a consignment of electronic goods to a retailer in Odisha. This consignment is an inter-State transaction. The tax on this consignment will be levied and collected by the Government of India. The net proceeds from this tax will be assigned to West Bengal and Odisha, based on distribution principles formulated by Parliament. This ensures that the states involved in the transaction benefit from the tax revenue generated.

Example 5:

A pharmaceutical company in Andhra Pradesh sells a batch of medicines to a hospital chain in Kerala. This sale is an inter-State transaction. The tax on this sale will be collected by the central government. However, the revenue from this tax will be assigned to Andhra Pradesh and Kerala. The distribution of the tax revenue will be done according to principles set by Parliament, ensuring that both states receive their appropriate share of the tax proceeds.