What are the provisions under Constitution of India dealing with GST?

 

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Introduction

Goods and Services Tax (GST) is an indirect tax that has replaced several indirect taxes in India, such as excise duty, value added tax (VAT), and service tax. The GST Act was passed by Parliament on 29 March 2017 and came into force on 1 July 2017.

GST is levied on the supply of goods and services. It is a comprehensive, multi-stage, destination-based tax that is charged on every stage of value addition. By subsuming most of the earlier indirect taxes, GST has created a single unified indirect tax system for the entire country.

 

Definition

GST is a destination-based consumption tax charged at every stage of the supply chain, where tax is paid on value addition and the final burden is borne by the consumer.

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Key Features

1. Single Indirect Tax System
   GST replaced taxes such as VAT, Service Tax, Excise Duty, Entry Tax, etc.
2. Dual Structure

i.    CGST – Collected by the Central Government

ii.    SGST – Collected by the State Government

iii.    IGST – Applied to inter-state transactions

3. Tax on Supply
   GST is imposed on the supply of goods and services, not on manufacture or sale.
4. Input Tax Credit (ITC)
   Businesses can claim credit for the tax paid on purchases, preventing tax on tax (cascading effect).
5. Destination-Based Tax
   Tax revenue goes to the state where goods or services are consumed.

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Example

If a product is manufactured in Maharashtra and sold to a consumer in West Bengal, the GST revenue will go to West Bengal, because GST is destination-based.

The key points (main features) of the Goods and Services Tax (GST) in India are:

 

1. Dual GST Structure

a.  India follows a dual model of GST, where both the Centre and the States levy tax.

b.  Types of GST:

¨     CGST – Central GST (collected by the Central Government)

¨     SGST – State GST (collected by State Governments)

¨     IGST – Integrated GST (for inter-state transactions)

2. Tax on Supply

GST is levied on the “supply of goods and services” rather than manufacture or sale.

3. Destination-Based Tax

§  GST is a destination-based consumption tax.

§  Tax revenue goes to the state where the goods or services are consumed, not where they are produced.

4. Input Tax Credit (ITC)

§  Businesses can claim credit for tax paid on inputs used in production or service.

§  This removes the cascading effect (tax on tax).

5. Comprehensive Tax System

§  GST subsumed many indirect taxes such as:

¨     VAT

¨     Service Tax

¨     Excise Duty

¨     Central Sales Tax

¨     Entry Tax, etc.

6. GST Council

A constitutional body that recommends tax rates, exemptions, and policies related to GST.

7. Uniform Tax System

Creates a common national market with uniform tax laws across India.

8. Online and Technology-Driven System

GST registration, return filing, and payments are done online through the GST portal, making the system transparent.

9. Threshold Exemption

Small businesses with turnover below the prescribed limit are exempt from GST or can opt for the composition scheme.

 

Provisions of Constitution of India dealing with GST

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The Constitution of India contains several provisions related to the Goods and Services Tax (GST), introduced through the 101st Constitutional Amendment Act, 2016. The key provisions are:

1. Article 246A – Special Provision for GST

§  Grants exclusive power to both Parliament and State Legislatures to make laws on GST.

§  Parliament has exclusive power to make laws on inter-state trade or commerce related to GST.

2. Article 269A – Levy and Collection of IGST

§  Introduces the concept of Integrated GST (IGST) for inter-state trade.

§  Central Government collects IGST, and the revenue is shared between the Centre and the State.

3. Article 279A – GST Council

§  Establishes the GST Council, a constitutional body for decision-making on GST-related matters.

§  Composition:

(a) Chairperson: Union Finance Minister.

(b) Members: State Finance Ministers and Union Minister of State for Revenue.

§  Functions:

Recommends tax rates, exemptions, threshold limits, and dispute resolution mechanisms.

4. Article 366(12A) – Definition of GST

Defines GST as any tax on the supply of goods, services, or both.

5. Article 268A (Repealed)

Earlier provided for Service Tax, which was subsumed into GST.

6. Schedule VII – Changes in Union & State Lists

i)      Entry 84 (Union List): Now includes only certain excise duties (on items like petroleum, tobacco, etc.).

ii)     Entry 54 (State List): Power of states to levy sales tax (VAT) is now limited to items like petroleum and liquor.

These constitutional provisions collectively provide the framework for the implementation of GST in India. Let me know if you need further clarification!

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