CONSTITUTIONAL AMENDMENT FOR PROPOSED GST- Part-1
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 29-12-2014
The Union Government on 19 December, 2014 introduced Constitution (122 Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and Service Tax (GST) in India.
It is to be very clearly understood that this is not a GST Bill. In fact, GST Bill is not in sight at all at this moment. What has been introduced is the Constitutional Amendment Bill enabling or empowering the Government to levy a tax called GST which it cannot levy under the present Constitution. The Bill on passage would enable the Central Government and the State Governments to levy GST. This tax (GST) shall be levied concurrently by various states as well as Union Government. Once this is passed by two-third majority in the Parliament, atleast 50 percent of the states will have to pass it. Once this amendment is through, the road will
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will have 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.
Clause 269A
* Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
* Supply of goods or services, or both in the course of import into the territory of India shall be deemed to be supply of goods or services, or both in the course of inter-state trade or commerce.
* Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods or of services, or both takes place in the course of inter-state trade or commerce.
Clause 279A
* The President shall, within sixty days from the date
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ter;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur; Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
What will Service Tax Council do
Apart from aforementioned recommendations, it shall undertake the following –
* The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.
The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
The Good
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icial Gazette, appoint, and different dates may be appointed for different provisions
of this Act and any reference in any such provision to the commencement of this Act shall
be construed
as a reference to the commencement of that provision.
2. After article 246 of the Constitution, the following article shall be inserted, namely:-
“246A. (1) Notwithstanding anything contained in articles 246 and 254,
Parliament, and, subject to clause (2), the Legislature of every State, have power to
make
laws with respect to goods and services tax imposed by the Union or by such
State.
Short title and
commencement.
Insertion of
new article
246A.
Special
provision
with respect
to goods and
services tax.
Amendment of
article 248.
Amendment of
article 249.
Amendment of
article 250.
Amendment of
article 268.
Omission of
article 268A.
Amendment of
article 269.
Insertion of
new article
269A.
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(2) Parliament has exclusive power to make laws with respect to goods and
s
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on medicinal and toilet preparations” shall be omitted.
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7. Article 268A of the Constitution, as inserted by section 2 of the Constitution 15
(Eighty-eighth Amendment) Act, 2003 shall be omitted.
8. In article 269 of the Constitution, in clause (1), after the words “consignment of
goods”, the words, figures and letter “except as provided in article 269A” shall be inserted.
9. After article 269 of the Constitution, the following article shall be inserted,
namely:
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Levy
and
collection of
goods and
services tax in
course of inter-
State trade or
commerce.
“269A. (1) Goods and services tax on supplies in the course of inter-State trade
or commerce shall be levied and collected by the Government of India and such tax
shall be apportioned between the Union and the States in the manner as may be
provided by Parliament by law on the recommendations of the Goods and Services
Tax Council.
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Amendment of
article 270.
Amendment of
article 271.
Explanation. For
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11. In article 271 of the Constitution, after the words “in those articles”, the words,
figures and letter “except the goods and services tax under article 246A,” shall be inserted.
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12. After article 279 of the Constitution, the following article shall be inserted, namely:-
“279A. (1) The President shall, within sixty days from the date of commencement
of the Constitution (One Hundred and Twenty-second Amendment) Act, 2014, by
order, constitute a Council to be called the Goods and Services Tax Council.
(2) The Goods and Services Tax Council shall consist of the following members,
namely:
(a) the Union Finance Minister……
(b) the Union Minister of State in charge of Revenue or
Finance……………..
Chairperson;
Member;
(c) the Minister in charge of Finance or Taxation or any other Minister
nominated by each State Government
Members.
(3) The Members of the Goods and Services Tax Council referred to in
sub-clause (c) o
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h respect to the States of Arunachal Pradesh,
Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council
may decide.
(5) The Goods and Services Tax Council shall recommend the date on which the
goods and services tax be levied on petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel.
(6) 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.
(7) One half of the total number of Members of the Goods and Services Tax
Council shall constitute the quorum at its meetings.
(8) The Goods and Services Tax Council shall determine the procedure in the
performance of its functions.
Insertion
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to
resolve disputes arising out of its recommendation.”.
13. In article 286 of the Constitution,
(i) in clause (1),
(A) for the words “the sale or purchase of goods where such sale or
purchase takes place”, the words “the supply of goods or
of services or both.
where such supply takes place” shall be substituted:
(B) in sub-clause (b), for the word “goods”, at both the places where it
occurs the words “goods 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) clause (3) shall be omitted.
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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
services or both except taxes on the supply of the alcoholic
liquor for human
consumption;';
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(ii) after clause (
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h
Schedule.
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(i) for entry 84, the following entry shall be substituted, namely:-
“84. Duties of excise on the following goods manufactured or
produced in India, 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) entry 52 shall be omitted;
(ii) for entry 54. the following entry shall be substituted, namely:-
“54. Taxes on the sale of petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas, aviation turbine fuel and
alcoholic liquor for human consumption, but not including sale in the
course of inter-State trade or commerce or sale in the course of
international trade or commerce of such goods.”;
(iii) entry 55 shall be omitted;
(iv) for entry 62, the following entry shall be substituted, namely:
“62. Taxes on enter
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use (1).
(4) Parliament may, by law, formulate the principles for determining the place of origin
from where supply of goods take place in the course of inter-State trade or commerce.
19. Parliament may, by law, on the recommendation of the Goods and Services Tax
40 Council, provide for compensation to the States for loss of revenue arising on account of
implementation of the goods and services tax for such period which may extend to five
years.
Arrangement
for assignment
of additional
tax on supply
of goods to
States for two
years or such
other period
recommended
by the
Council.
Compensation
to States for
loss of
revenue on
account of
introduction
of goods and
services tax.
Transitional
provisions.
Power of
President to
remove
difficulties.
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20. Notwithstanding anything in this Act, any provision of any law relating to tax on
goods or services or on both in force in any State immediately before
the commencement of
this Act, which is inconsistent wi
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der made under sub-section (/) shall, as soon as may be after it is made.
be laid before each House of Parliament.
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STATEMENT OF OBJECTS AND REASONS
The Constitution is proposed to be amended to introduce the goods and services tax
for conferring concurrent taxing powers on the Union as well as the States including Union
territory with Legislature to make laws for levying goods and services tax on every transaction
of supply of goods or services or both. The goods and services tax shall replace a number of
indirect taxes being levied by the Union and the State Governments and is intended to
remove cascading effect of taxes and provide for a common national market for goods and
services. The proposed Central and State goods and services tax will be levied on all
transactions involving supply of goods and services, except those which are kept out of the
purview of the goods and services tax.
for-
2. The proposed Bill, which seeks further to amend the Constitution,
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es;
(e) levy of an additional tax on supply of goods, not exceeding one per cent. in
the course of inter-State trade or commerce to be collected by the Government of India
for a period of two years, and assigned to the States from where the supply originates;
(f) conferring concurrent power upon Parliament and the State Legislatures to
make laws governing goods and services tax;
(g) coverage of all goods and services, except alcoholic liquor for human
consumption, for the levy of goods and services tax. In case of petroleum and petroleum
products, it has been provided that these goods shall not be subject to the levy of
Goods and Services Tax till a date notified on the recommendation of the Goods and
Services Tax Council.
(h) compensation to the States for loss of revenue arising on account of
implementation of the Goods and Services Tax for a period which may extend to five
years;
(i) creation of Goods and Services Tax Council to examine issues relating to
goods and se
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voting” in favour of a proposal in the Goods and Services Tax Council shall be
determined as under:-
WT= WC+WS
Where,
WT WC+WS =
Wherein-
× SF
SP
===
WT Total weighted votes of all members in favour of a proposal.
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WC = Weighted vote of the Union = i.e., 33.33% if the Union is in favour of the
proposal and be taken as “0” if, Union is not in favour of a proposal.
=====
WS Weighted votes of the States in favour of a proposal.
SP
=====
Number of States present and voting.
WST = Weighted votes of all States present and voting i.e., i.e., 66.67%
SF = Number of States voting in favour of a proposal.
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(j) Clause 20 of the proposed Bill makes transitional provisions to take care of
any inconsistency which may arise with respect to any law relating to tax on goods or
services or on both in force in any State on the commencement of the provisions of the
Constitution as amended by this Act within a period of one year.
3. the Bill seeks to achieve the above objects
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ance or
Taxation or any other Minister nominated by each State Government.
2. The creation of Goods and Services Tax Council will involve expenditure on office
expenses, salaries and allowances of the officers and staff. The objective that the introduction
of goods and services tax will make the Indian trade and industry more competitive,
domestically as well as internationally and contribute significantly to the growth of the
economy, such additional expenditure on the Council will not be significant.
3. At this stage, it will be difficult to make an estimate of the expenditure, both recurring
and non-recurring on account of the Constitution of the Council.
4. Further, it is provided for compensation to the States for loss of revenue arising on
account of implementation of the Goods and Services Tax for such period which may extend
to five years. The exact compensation can be worked out only when the provisions of the Bill
are implemented.
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MEMORANDUM REGARDING DELEGATE
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te List.
Residuary
powers of
legislation.
*
249. (1) Notwithstanding anything in the foregoing provisions of this Chapter, if the
Council of States has declared by resolution supported by not less than two-thirds of the
members present and voting that it is necessary or expedient in the national interest that
Parliament should make laws with respect to any matter enumerated in the State List
specified in the resolution, it shall be lawful for Parliament to make laws for the whole or
any part of the territory of India with respect to that matter while the resolution remains in
force.
Power of
Parliament to
legislate with
respect to a
matter in the
State List in
the national
interest.
250. (1) Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation
of Emergency is in operation, have power to make laws for the whole or any part of the
territory of India with respect to any of the matters enumerated in the State List.
*
Distribution of Reven
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s on the sale or purchase of goods and taxes on the consignment of
goods shall be levied and collected by the Government of India but shall be assigned and
shall be deemed to have been assigned to the States on or after the 1st day of April, 1996
in the manner provided in clause (2).
Explanation. For the purposes of this clause,
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Power of
Parliament to
legislate with
respect to any
matter in the
State List if a
Proclamation
of Emergency
is in operation.
Duties levied by
the Union but
collected and
appropriated by
the States.
tax
Service
levied by Union
and collected
and
appro-
priated by the
Union and the
States.
Taxes levied
and collected
by the Union
but assigned to
the States.
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(a) the expression “taxes on the sale or purchase of goods” shall mean taxes on
sale or purchase of goods other than newspapers, where such sale or purchase takes
place in the course of inter-State trade or commerce;
(b) the expression “taxes on the consignment of goo
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eds of any such surcharge shall form part of the
Consolidated Fund of India.
Restrictions as
to imposition
of tax on the
sale or
purchase of
goods.
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
(a) outside the State; or
(b) 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 authorises the imposition of,-
(a) 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
(b) a tax on the sale or purchase of goods, being a tax of the nature referred to in
sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366,
be
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c) any of the Lists in the Seventh Schedule, or
(d) the representation of States in Parliament, or
(e) the provisions of this article,
the amendment shall also require to be ratified by the Legislatures of not less than one-
half of the States by resolutions to that effect passed
by those Legislatures before the
Bill making provision for such amendment is
presented to the President for assent.
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SIXTH SCHEDULE
[Articles 244(2) and 275(1)]
Provisions as to the Administration of Tribal Areas in the States of Assam,
Meghalaya, Tripura and Mizoram
8. (1) *
(3) The District Council for an autonomous district shall have the power to levy and
collect all or any of the following taxes within such district
, that is to say
(c) taxes on the entry of goods into a market for sale therein, and tolls on
passengers and goods carried in ferries; and
(d) taxes for the maintenance of schools, dispensaries or roads.
Powers to
assess and
collect land
revenue and to
impose taxes.
S
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