J.K.Mittal FCA, FCS,LLB Goods and Service Tax The Constitution (101 Amendment) Act, 2016 Notified on 16 th Sept. 2016 Presented By J.K. MITTAL (Advocate) Co-Chairman, National Council (Indirect Taxes), ASSOCHAM LL.B.,F.C.A., F.C.S. NEW DELHI Ph: 011-22056635, 011-22461071,72,76 Fax: 011-22447420 Email: jkmittalservicetax@gmail.com 1
Object and Reason for amendment in Constitution 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. Intended to remove cascading effect of taxes and provide for a common national market for goods and services. 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. 2
Article 246A Special Provisions with respect to goods and Service Tax (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. (2) 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. However, in respect of following goods and services tax will take effect from the date recommended by the Goods and Services Tax Council: (i) petroleum crude, (ii) high speed diesel, (iii) motor spirit (commonly known as petrol), (iv) natural gas and (v) aviation turbine fuel 3
Article 248 Amendment [Residuary powers of Legislation by Parliament] Subject to article 246A, Parliament has exclusive power to make any law (including imposing tax) with respect to any matter not enumerated in the Concurrent list or state List. Service tax was levied by exercising this power. After the said amendment, Parliament residuary power to impose tax will be subject to goods and services tax, in other words, under such residuary power those items cannot be brought under tax, on which GST is levied. 4
Article 249/ 250 Amendment [Power to legislate with respect to a matter in the State List in the National Interest/ emergency] Parliament will have power to make law in national interest if requested by States Council by passing resolution/ proclamation of emergency in operation for Goods and Service Tax leviable by State. Article 268 Amendment [Duties levied by Union but collected and appropriated by State] Consequential amendment to remove from this article duties of excise levied and collected by states on Medicinal and Toilet Preparations. 5
Article 268A Omission [levy of service tax and its appropriation ] Subject to article 268A, Service Tax levied by Union and collected and appropriated by the Union and the States. Article 268A of the Constitution, as inserted by section 2 of the Constitution (Eighty-eighth Amendment) Act, 2003 shall be omitted. As such provisions of same were never been made effective. 6
Article 269 amendment [taxes levied and collected by Union but assigned to the States ] inter state transactions Except as provided in Article 269A Taxes levied and collected by the Union but assigned to the States. Taxes on sales or purchases of inter state trade or commerce. Taxes on consignment takes place in the course of inter state trade or commerce. [new article 269A to Levy and collection of goods and services tax in course of inter- State trade or commerce on supplies of goods and/ or services ] 7
Article 269A [Levy and collection of goods and services tax in course of inter- State trade or commerce ] Article 269A [new article] (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. Explanation. For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-state trade or commerce. (2) 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. 8
Article 270 Amendment [Taxes levied and distributed between the Union and the States] on recommendation of Finance Commission Consequential amendment to remove reference of Article 268A and to insert Article 269A in Article 270. Further to make provisions for distribution of goods and service tax levied and collected by the Government of India, [except the tax GST on supplies on inter-state supplies], shall also be distributed between the Union and the States as recommended by the Finance Commission. 9
Article 271 Amendment [Surcharge on certain duties and taxes for purposes of the Union] The Parliament has power to impose surcharge, however, by the said amendment, GST levied under Article 246A has been kept out of Article 271. Therefore, after the said amendment, there will not be any surcharge on goods and service tax. 10
GST Council Article 279A 1. Within sixty days from the date of the 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 Council shall function under the Chairmanship of the Union Finance Minister and will have the Union Minister of State in charge of Revenue or Finance as member, along with the Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government as members. 3. Every decision of the Council shall be taken by a majority of not less than 3/4 th of the weighted votes of the members present and voting [50% of total members shall be quorum] in accordance with the following principles: (A) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (B) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting. 4. Council may decide about the modalities to resolve disputes arising out of its recommendation. 11
GST Council Article 279A 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. The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on :. (i) petroleum crude, (ii) high speed diesel, (iii) motor spirit (commonly known as petrol), (iv) natural gas and (v) aviation turbine fuel 12
GST Council Article 279A [notified on 10 th Seot 2016 w.e.f. 12 th September 2016] The Goods and Services Tax Council shall make recommendations to the Union and the States on (a) the taxes, cesses and surcharges levied by the Union, 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) model Goods and Services Tax Laws, principles of levy, apportionment of Integrated Goods and Services Tax and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (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 13 (h) any other matter relating to the goods and services tax, as the Council may decide.
Article 286 Amendment [Restrictions as to imposition of tax on the sale or purchase of goods. ] which are outside State or export/import Consequential amendment to replace reference to 1. "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". 2. goods, with the words goods or services or both 3. Dispensing with the concept of declared goods of special importance under the Constitution. 14
Article 366 Amendment [Definitions. ] New Definitions (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. (26A) Services means anything other than goods. Goods, already defined;- (12) goods includes all materials, commodities, and articles; (26B) State with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature. 15
Article 368 Amendment [Power to amend constitution. ] 368. Article 368 has been amended to make article 279A (related to GST Council) subject to rigorous amendment procedure with the consent of 50% of States by their Legislatures. 16
Schedule VI Amendment For administration of Tribal Areas in North East States, Assam, Meghalaya, Tripura and Mizoram, The powers to assess and collect land revenue and to impose taxes is to be extended to impose taxes on entertainment and amusements. 17
Schedule VII Amendment Union List [List -1] Entry 84 shall be substituted (related to imposition of excise duty) "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."; 18
Schedule VII Amendment Union List [List -1] Entry 92 shall be omitted Which is presently - Taxes on the sale or purchase of newspapers and on advertisements published therein. Entry 92C shall be omitted Which is presently - Taxes on Services 19
Schedule VII Amendment State List [List -2] Entry 52 shall be omitted Which is presently - Taxes on the entry of goods into a local area for consumption, use or sale therein. Entry 54 shall be substituted Which is presently - Taxes on the Sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I New Entry 54 "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." 20
Schedule VII Amendment State List [List -2] Entry 55 shall be omitted Which is presently - Taxes on advertisements other than advertisements published in the newspapers and advertisement broadcast by radio or television. Entry 62 shall be substituted Which is presently - Taxes on Luxuries, including taxes on entertainments, amusements, betting and gambling New Entry 62 62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council." 21
Transitional provisions [SECTION 19 of the Constitution (101) Amendment Act 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 with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier. 22
Date of Commencement [section 1(2) of 122 nd Constitutional amendment bill, 2014 It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint [i.e. date to be notified], 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. 23
will replaced various indirect taxes The goods and services tax shall replace a number of indirect taxes being levied by the Union and the State Governments. 24
(a) (b) (c) (d) (e) (f) (g) Central Taxes to be subsume [on the basis of amendments in Entry 84 of Union List and Article 271 Central Excise Duty, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, Special Additional Duty of Customs, and Central Surcharges and Cesses so far as they relate to the supply of goods and services; 25
(a) (b) (c) (d) (e) (f) (g) (h) State Taxes to be subsume - on the basis of amendment in Entry 52, Entry 54, Entry 55 and Entry 62 and Article 269 & 271 State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services 26
Some other Important impact Dispensing with the concept of declared goods of special importance under the Constitution. levy of Integrated Goods and Services Tax on inter-state transactions of goods and services. 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. 27
Goods Not cover under GST Coverage of all goods and services, except alcoholic liquor for human consumption. petroleum and petroleum products, [till a date notified on the recommendation of the Goods and Services Tax Council] 28
In the words of Mahatma Gandhi there is higher court than courts of justice and that is the court of conscienceness. It supercedes all other courts. Thank you.. 29