M/S. S.A.I.L. vs STATE OF ORISSA

The Supreme Court upheld the High Court's decision to strike down Section 13AA of the Orissa Sales Tax Act, which mandated a two percent deduction from payments to contractors without allowing for exemptions for non-taxable transactions. The Court found that the provision was unconstitutional as it imposed a blanket deduction on all payments, including those not liable for sales tax, thus violating principles of fairness and equality. The ruling reinforced the need for a mechanism to exempt certain transactions from tax deductions, establishing that arbitrary tax provisions are unconstitutional.