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INSERTION OF ARTICLE 246A - SPECIAL PROVISION WITH RESPECT TO GOODS AND SERVICE TAX

Article 246A is inserted empowering Union Government and State Governments to make laws with respect to goods and services.

In respect to goods and service tax where the supply of goods, or of services, or both takes place in the course of inter-state trade or Commerce Parliament has exclusive power to make laws.

However in respect of GST be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, this article shall be effective from the date recommended by the GST Council.

ARTICLES OF CONSTITUTION REFERRED

246A - Subject-matter of laws made by Parliament and by the Legislatures of States.

254 – Inconsistency between laws made by Parliament and laws made by the Legislatures of States.

279A - Goods and Service Tax Council

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AMENDMENT OF ARTICLE 248 - RESIDUARY POWERS OF LEGISLATION

Under Article 248, Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

This power would be now exclude powers in respect of taxation of Goods and Services

ARTICLES OF CONSTITUTION REFERRED

248-Residuary powers of legislation

Article 246A. - Special provision with respect to goods and service tax

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AMENDMENT OF ARTICLE 249: POWER OF PARLIAMENT TO LEGISLATE WITH RESPECT TO A MATTER IN THE STATE LIST IN THE NATIONAL INTEREST

Power of Parliament to legislate with respect to a matter in the State List in the national interest. Under Article 249, Parliament has powers to legislate with respect to a matter in the State List in the national interest. This power would be now exclude powers in respect of taxation of Goods and Services

ARTICLES OF CONSTITUTION REFERRED

249- Power of Parliament to legislate with respect to a matter in the State List in the national interest

246A- Special provision with respect to goods and service tax

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AMENDMENT OF ARTICLE 250: POWER OF PARLIAMENT TO LEGISLATE WITH RESPECT TO ANY MATTER IN THE STATE LIST IF A PROCLAMATION OF EMERGENCY IS IN OPERATION

Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation.

Under Article 250, Parliament has powers to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation.

This power would be now exclude powers in respect of taxation of Goods and Services

ARTICLES OF CONSTITUTION REFERRED

250-Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation.

246A- Special provision with respect to goods and service tax

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Amendment of article 268: Duties levied by the Union but collected and appropriated by the States.

Under Article 268, Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected appropriated by the States.

It now proposed that such duties of excise on medicinal and toilet preparations since it would be subsumed under GST.

ARTICLES OF CONSTITUTION REFERRED

268-Duties levied by the Union but collected and appropriated by the States.

246A- Special provision with respect to goods and service tax

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Omission of Article 268A:

Article 268A was inserted in 2003 to enable levy of service tax by the Union and the proceeds were shared with the States.

In view of subsuming Service Tax under GST, this article being redundant is proposed to be omitted.

ARTICLES OF CONSTITUTION REFERRED

268A- Service tax levied by Union and collected and appropriated by the Union and the States.

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Amendment of article 269: Taxes levied and collected by the Union but assigned to the States

Under Article 269, Taxes on the interstate sale or purchase of goods and taxes on the interstate consignment of goods shall be levied and collected by the Government of India but shall be assigned to the States.

This article is proposed to be amended to specify that in respect of goods and services tax in course of inter-State trade or commerce the levy, collection and apportionment shall be in the manner specified in the new Article 269A proposed to be inserted.

ARTICLES OF CONSTITUTION REFERRED

269- Taxes levied and collected by the Union but assigned to the States

269A- Levy and collection of goods and services tax in course of inter- State trade or commerce

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Insertion of new article 269A:Levy and collection of goods and services tax in course of inter- State trade or commerce

This article is inserted to facilitate levy of IGST under the proposed GST.

ARTICLES OF CONSTITUTION REFERRED

269A- Levy and collection of goods and services tax in course of inter- State trade or commerce

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Amendment of Article 270:Taxes levied and distributed between the Union and the States

Article 270 specifies the manner of distribution of the Taxes levied by the Union Government which is shared with the States in the manner determined by the Finance Commission.

It is now proposed that distribution of IGST would be excluded from the scope of Article 270 since the manner of sharing with the States would be as determined by Parliament by law on the recommendations of the Goods and Services Tax Council.

It is further provided that the share accruing to the Union Government would be distributed to the States in the manner specified in Article 270.

ARTICLES OF CONSTITUTION REFERRED

270-Taxes levied and distributed between the Union and the States

268-Duties levied by the Union but collected and appropriated by the States

269- Taxes levied and collected by the Union but assigned to the States

269A- Levy and collection of goods and services tax in course of inter- State trade or commerce

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Amendment of Article 271: Surcharge on certain duties and taxes for purposes of the Union.

This article empowers the Parliament to increase any of the duties or taxes referred to in articles 269 ( interstate sale) and 270 (Taxes levied and distributed between the Union and the States) by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.

This article is now proposed to be subject to the provisions relating to levy of GST.

ARTICLES OF CONSTITUTION REFERRED

271-Surcharge on certain duties and taxes for purposes of the Union.

246A- Special provision with respect to goods and service tax

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Insertion of new article 279A: Goods and Services Tax Council

This article Empowers President of India to constitute a Goods and Service Tax (GST) Council.

The salient points are

COMPOSITION

Union Finance Minister is the Chairperson

Union Minister of State in charge of Revenue or Finance shall be a member Minister in charge of Finance of Taxation or any other Minister nominated by each State government shall be members.

VICE CHAIRMAN

The GST Council should choose one amongst them to be the Vice-Chairperson of the Council for such period as they may decide.

ROLE OF GST COUNCIL

A) To recommend to Union and State on the taxes, cesses and surcharges levied by Union, State or local bodies that can be subsumed in the GST

B) To recommend on goods and services that may be subjected to, or exempted from the GST

C) To propose a model GST Laws, principles of levy, apportionment of Integrated GST and the principles that govern the place of supply

D) To recommend the threshold limit of turnover below which goods and services amy be exempted from GST

E)  To Recommend the rate including floor rates with bands of GST

F) To Recommend any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster

G) To Recommend special provisions with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand

QUORUM AND DECISION MAKING

One half of the total number of members of the GST Council shall constitute the quorum at its meeting

Every decision of the Council shall be taken by a majority of not less than three-fourth of the weighted votes of the members present and voting in accordance with the following principles:

(a) The vote of the Union government shall have a weightage of one-third of the total votes cast

(b) The votes of all the States government taken together shall have  a weightage of two-third of the total votes cast in the meeting

ARTICLES OF CONSTITUTION REFERRED

279 A Goods and Services Tax Council

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Amendment of article 286: Restrictions as to imposition of tax on the sale or purchase of goods.

Article 286, in order to ensure that State Government makes law relating to sale of Goods within the State only places Restrictions as to imposition of tax on the sale or purchase of goods that happen in the course of Inter State Sale or in the course of Import / Export and also in respect of “Declared Goods”.

This article amended to be in line with the proposed GST by specifying “the supply of goods or of services or both, where such supply takes place” instead of “the sale or purchase of goods where such sale or purchase takes place.

Clause (3) relating to restrictions on “Declared Goods” is omitted as there would be no “Declared Goods”. 

ARTICLES OF CONSTITUTION REFERRED

286- Restrictions as to imposition of tax on the sale or purchase of goods.

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Amendment of Article 366:

In article 366 of the Constitution,

Article 366 defines various terms in the Constitution.

New clauses are inserted to define

“Goods and Services Tax”, “Services” and “States” for the purpose of levy of GST. “Goods and Services Tax”, is defined to mean any tax on supply of goods, or services, or both except taxes on the supply of the alcoholic liquor for human consumption”

Levy of tax on alcoholic liquor for human consumption is outside the scope of GST.

“Services” is defined to mean anything other than Goods.

ARTICLES OF CONSTITUTION REFERRED

246A- Special provision with respect to goods and service tax

268-Duties levied by the Union but collected and appropriated by the States

269- Taxes levied and collected by the Union but assigned to the States

269A- Levy and collection of goods and services tax in course of inter- State trade or commerce

279A- Goods and Service Tax Council

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Amendment of Article 368:

Article 368 relates to Power of Parliament to amend the Constitution and procedure therefor.

Clause (2) of the Article is amended to include Article 279A (Goods and Services Tax Council) and requires approval of 50% of the State Legislatures.

ARTICLES OF CONSTITUTION REFERRED

162- Extent of executive power of State.

241- High Courts for Union territories

279A- Goods and Service Tax Council

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Amendment of Sixth Schedule

Sixth Schedule relates to– Provisions as to the administration of tribal areas in the State of Assam, Meghalaya, Tripura and Mizoram

Paragraph 8 relates to Powers to assess and collect land revenue and to impose taxes.

In this clause power to levy taxes on entertainment and amusements is inserted.

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Amendment of Seventh Schedule

Seventh Schedule List – I is the list of goods on which the Central Government can levy tax.

In this list Entry 84 is substituted to include all all goods and services, except alcoholic liquor for human consumption in the proposed GST.

Entry 92 relating to Taxes on the sale or purchase of newspapers and on advertisements published therein

Entry 92C relating to Taxes on services is omitted.

Seventh Schedule List – II is the list of goods on which the State Governments can levy tax.

Entry 52 relating to levy of Entry Tax is omitted and would be subsumed in GST.

Entry 54 is substituted to include petroleum products and and alcoholic liquor for human consumption but excluding transactions in the in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.

Entry 55 relatint to taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television is omitted.

Entry 62 is substituted to include only 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

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Compensation to States for loss of revenue on account of introduction of goods and services tax.

This provision enables compensation to the States for loss of revenue arising on account of implementation of goods and services tax for such period which may extend to five years.

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Transitional provisions.

The existing law pertaining to goods or services or both, in States, may remain in force until amended or repealed by a competent Legislature or other competent authority or unit expiration of one year from such commencement, whichever is earlier.

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Power of president to remove difficulties

The President may by order, make necessary provisions for removing difficulties arising out the amendments of this Act. However, no such order to be made upon expiry of three years from the date of assent of this Act. Further, every such order to be placed before each house of Parliament.