Article 286 :

1. No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place
   1. outside the State; or
   2. in the course of the import of the goods into, or export of the goods out of, the territory of India
2. Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1)
3. Any law of a State shall, in so far as it imposes, or authorizes the imposition of,
   1. a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter State trade or commerce; or
   2. a tax on the sale or purchase of goods, being a tax of the nature referred to in sub clause (b), sub clause © or sub clause (d) of clause 29 A of Article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.

Article 286 , which imposes certain restrictions on the power of the State to impose sales tax, on goods was amended in 1956 by the Constitution (Sixth Amendment) Act, under which taxes on sale or purchase of goods in the course of inter-state trade or commerce were brought expressed within the purview of the legislative jurisdiction of parliament.

In Bengal Immunity Co. vs. State of Bihar, AIR 1955 SC661, the Supreme Court held that state is not competent to impose tax on inter-state trade. ln Tata Iron and steel Co. Vs. State of Bihar, AI R 1958 SC 452 it was held b the Supreme court that doctrine of nexus does not impose the tax and it only indicates the circumstances in which a tax is imposed b the legislature. It is important to note that sale or purchase must occasion the movement of goods from one state to another. Parliament is empowered in relation to the goods declared to be of special importance in inter - State trade or commerce to la down the restrictions and conditions subject to which an State law ma regulate the tax on sales or purchases of such goods in the state.