Govt introduces Constitution Bill in LS for GST
GST
Dated:- 22-3-2011
New Delhi, Mar 22 (PTI) The government today introduced a Constitution Amendment Bill in the Lok Sabha to facilitate implementation of the Goods and Service Tax (GST), an indirect tax regime that would subsume levies like excise, service tax and sales tax.
The Bill, introduced by Finance Minister Pranab Mukherjee seeks to amend the constitution with a view to confer simultaneous powers on centre and states to levy taxes on goods and services.
"The GST would replace a number of indirect taxes presently being levied by the central government and the state governments and is intended to remove cascading of taxes and provide a common national market for goods and services", said the statement of objects and reasons of the Bill.
The Bill provides for creation of a GST Council to be headed by Union Finance Minister.
GST : The Constitution (One Hundered and Fifteenth Amendment) Bill, 2011*
[BILL
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he Union or by that State respectively :
Provided that Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Explanation.-For the purpose of this article, “State” includes a Union territory with Legislature.”
Amendment of article 248
3. In article 248 of the Constitution, in clause (1), for the word “Parliament”, the words, figures and letter “Subject to article 246A, Parliament” shall be substituted.
Amendment of article 249
4. In article 249 of the Constitution, in clause (1), after the words “with respect to”, the words “goods and services tax or” shall be inserted.
Amendment of article 250
5. In article 250 of the Constitution, in clause (1), after the words “with respect to”, the words “goods and services tax or” shall be inserted.
Amendment of article 268
6. In article 268 of the Constitution, in clause (1), the words “and such duti
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services or both in the course of import into theterritory ofIndia shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
Explanation II.-For the purpose of this article, “State” includes a Union territory with Legislature.
(2) Parliament may, by law, formulate the principles for determining when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.”
Amendment of article 270
10. In article 270 of the Constitution,-
(i) in clause (1), for the words, figures and letter “articles 268,268A and 269”, the words, figures and letter “articles 268, 269 and 269A” shall be substituted;
(ii) after clause (1), the following clause shall be inserted, namely :-
“(1A) Goods and services tax levied and collected by the Government of India shall also be distributed between the Unionand the States in the manner provided in clause (2).”.
Amendment of article 271
11. In article 271 of the Co
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t themselves to be the Vice-Chairperson of the Council for such period as they may decide.
(4) The Goods and Services Tax Council shall make recommendations to theUnionand the States on-
(a) the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to or exempted from the goods and services tax;
(c) the threshold limit of turnover below which goods and services tax may be exempted;
(d) the rates of goods and services tax; and
(e) any other matter relating to the goods and services tax, as the Council may decide.
(5) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
(6) One-third of the total number of members of the Goods and Services Tax Coun
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rnment or the Government of India arising out of a deviation from any of the recommendations of the Goods and Services Tax Council constituted under article 279A that results in a loss of revenue to a State Government or the Government of India or affects the harmonised structure of the goods and services tax.
(2) The Goods and Services Tax Dispute Settlement Authority shall consist of a Chairperson and two other members.
(3) The Chairperson of the Goods and Services Tax Dispute Settlement Authority shall be a person who has been a Judge of the Supreme Court or Chief Justice of a High Court to be appointed by the President on the recommendation of the Chief Justice of India.
(4) The two other members of the Goods and Services Tax Dispute Settlement Authority shall be persons of proven capacity and expertise in the field of law, economics or public affairs to be appointed by the President on the recommendation of the Goods and Services Tax Council.
(5) The Goods and Services Tax Dis
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oods or services or both” shall be substituted;
(ii) in clause (2), for the words “sale or purchase of goods takes place”, the words “supply of goods or of services or both” shall be substituted;
(iii) for clause (3), the following clauses shall be substituted, namely :-
“(3) Any law of a State shall, in so far as it imposes, or authorises the, imposition of 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 be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of tax as Parliament may by law specify.
(4) Nothing in clause (3) shall apply to a law of a State insofar as it imposes or authorises the imposition of goods and services tax.”.
Amendment of article 366
14. In article 366 of the Constitution,-
(i) after clause (12), the following clause shall be inserted, namely :-
'(12A) “goods and services tax” means any tax on supply of goods or servic
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. In the Seventh Schedule to the Constitution,-
(a) in List I – Union List,-
(i) for entry 84, the following entry shall be substituted, namely:-
“84. Duties of excise on the following goods manufactured or produced inIndia, namely:-
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.”;
(ii) entries 92 and 92C shall be omitted;
(b) in List II – State List,-
(i) for entry 52, the following entry shall be substituted, namely:-
“52. Taxes on the entry of goods into a local area for consumption, use or sale therein to the extent levied and collected by a Panchayat or a Municipality.”;
(ii) for entry 54, the following entry shall be substituted, namely:-
“54. Taxes on the sale, other than sale in the course of inter-State trade or commerce or sale in the course of international trade and commerce of, petroleum crude, high speed diesel, natural
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on as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiry of three years from the date of such assent.
(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament.
STATEMENT OF OBJECTS AND REASONS
The scheme of the Constitution does not provide for any concurrent taxing powers to theUnionas well as the States. It is proposed to introduce the goods and services tax and for this purpose to amend the Constitution conferring s
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vice Tax, Additional Customs Duty commonly known as Countervailing Duty (CVD), Special Additional Duty of Customs (SAD), Central Surcharges and Cesses (excluding those applicable to income-tax, customs duties and to excise duties so far as they relate to goods outside the purview of the goods and services tax;
(b) subsuming of State VAT/Sales Tax, entertainment tax (unless it is levied by the local bodies), Luxury Tax, Taxes on lottery, betting and gambling, tax on advertisements, State Cesses and Surcharges insofar as they relate to supply of goods and services and Entry Tax, not levied by local bodies;
(c) levy of Integrated GST (IGST) on inter-State transactions of goods and services;
(d) conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
(e) coverage of goods other than crude petroleum, diesel, pertol, aviation turbine fuel, natural gas and alcohol for human consumption under the goods and services tax for
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area for consumption, use or sale therein;
(k) allowing States to levy tax on intra-State sale of goods kept outside the purview of the goods and services tax, namely, Petroleum crude, High Speed Diesel, Natural Gas, Motor Spirit (Petrol), Aviation Turbine Fuel and Alcoholic Liquor for human consumption.
3. The Bill seeks to achieve the above objects.
New Delhi;
Pranab Mukherjee
The 16th March, 2011.
Presidents recommendation under article 117 of the Constitution of India
[Copy of letter No. 31011/04/2009, dated 16-3-2011 from Shri Pranab Mukherjee, Minister of Finance to the Secretary-General, Lok Sabha]
The President, having been informed of the subject matter of the proposed Bill, recommends, under clauses (1) and (3) of article 117, read with clause (4) of article 274, of the Constitution of India, the introduction of the Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 in Lok Sabha and also the consideration of the Bill.
FINANCIAL MEMORANDUM
Clause 12 of t
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ernment or the Government of India or affects the harmonised structure of the goods and services tax.
There are no direct financial implications on account of the proposal. However, the creation of the Goods and Services Tax Council and the Goods and Services Tax Dispute Settlement Authority will involve creation of some posts. Given that the introduction of goods and services tax will make the Indian trade and industry much more competitive, domestically as well as internationally and contribute significantly to the growth of the economy, such additional expenditure on these bodies would be miniscule.
It is not practicable to make an estimate of the expenditure, both recurring and nonrecurring on account of the above. However, such expenditure would be considerably marginal.
MEMORANDUM REGARDING DELEGATED LEGISLATION
Clause 12 of the Bill seeks to insert a new article 279A relating to the constitution of a Council to be called the Goods and Services Tax Council and another article
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