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The ‘GST’ Constitution Amendment Bill, (No. 192 of 2014) – Facilitating GST Law (An Analysis)
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....he ‘GST’ Constitution Amendment Bill, (No. 192 of 2014) – Facilitating GST Law (An Analysis)<br>By: - CA.Ankit Gulgulia<br>Goods and Services Tax - GST<br>Dated:- 31-12-2014<br><br>One of the major Indirect tax reforms that the country is now on road to witness is the incarnation of a single GST law instead of multiple indirect taxes viz Service Tax, Central Excise, VAT, CST, Local Body Tax, Entry Tax etc. After a round of discussions of Hon'ble Finance Minister with State FM's, the Government of India has tabled the GST Bill (No. 192 - Constitutional Amendment), 2014 on 19th December,2014. The clause by clause analysis of GST Bill, 2014 is as under:- * Insertion of Clause 246A - To Facilitate the Parliament and States to make laws in regard to Goods and Service Tax Imposed by Union or such State "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. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or bot....
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....h takes place in the course of inter-State trade or commerce. Explanation: - The provisions of this article, shall, in respect of goods and services tax referred to in clause (5), of article 279A, take effect from the date recommended by the Goods and Service Tax Council" BRIEF ANALYSIS Article 246 of Constitution of India establishes the law making jurisdiction of Central and State governments over Union List, State List and the concurrent list of Schedule VII to the Constitution. Article 254 establishes that the law enacted by Central government shall prevail over the state government where the laws are conflicting on subject matter of concurrent list (except that the state law may prevail in that state subject to Hon'ble President Assent. The article 246A(1) shall empower goods and service tax law framing with both the central and state government unlike in the current case where the service tax / excise was centre's domain in union list and sales tax on goods was state's domain except in case of interstate transactions. Article 246(2) reestablishes the centre's exclusive control on interstate supply of goods and services. Importantly interstate supply of services will mark....
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.... its separate significance in the proposed GST regime. Article 279A is proposed for setup of GST Council within 60 days of commencement of this Act, 2014. The items proposed in article 279A (5) includes petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel. The date on which GST is to be levied on these items is to be recommended by GST council. Facilitative amendments in Article 248(1), 249(1), 250(1), 268(1), 269(1), 270(1), 286. Omitting Article 268A. BRIEF ANALYSIS Article 248(1) empowers the parliament to make laws on any matters not covered in state list and concurrent list. Hence in a sense this article is giving powers on residual matters to parliament. Now, this has been made subject to 246A since GST shall be both centre's and state's domain. Article 249(1) empowers the parliament to make laws even of state list where it is in national interest and the council of states have passed a resolution to this effect of 2/3rd members or more. Now, GST has been also covered in this provision. Article 250(1) empowers the parliament to make laws even of state list in pursuance to proclamation of emergency being in operation. Now, GST....
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.... has been also covered in this provision. Article 268(1) governs levy of duties of excise on medicinal and toilet preparations as mentioned in union list but are collected by state. Now, the duties of excise on medicinal and toilet preparations is being omitted. Apportioning of taxes between centre and state is facilitated by Article 268A (Services) will be dispensed away. Article 269 facilitates levy and collection of interstate tax on sale of goods (not services) or consignment of goods but the same to be assigned to states. Now, the interstate supply of goods and services has been made an exception to this pure assignment to states since service now covered. A separate article 269A has been inserted to apportionate the taxes. Article 270 provides for apportionment of taxes and duties between Union and State. The Interstate GST has been kept out of this by inserting necessary exception. The reason for this exception is since the apportionment in interstate's case is not to be undertaken as per Article 270 laid mechanism but on recommendations of GST council as facilitated under Article 269A. In other cases of GST levied by government of India, a new clause 270(1A) is inserted....
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.... and apportionment to be in accordance with normal provisions of Article 270 only. Article 286 imposes restrictions for imposition of taxes on sale or purchases of goods in case of interstate trade, imports or exports or trade outside the state. It empowers the parliament for the same. Now, this is extended to GST. Insertion of Article 269A - Apportionment of Interstate Taxes on Supply of Goods and Services based on GST Council's recommendations. "269A. (1) Goods and service tax on supplies in course of inter-state trade or commerce shall be levied and collected by government of India and such tax shall be apportioned between the Union and states in the manner as may be provided by the parliament by law on recommendations of goods and service tax council. Explanation: - For the purpose of this clause, supply of goods, or of services, or both in course of import into the territory of India shall be deemed to be supply of goods or of services or both in course of inter-state trade or commerce. (2) Parliament may by law, formulate the principles for the determining the place of supply, and when a supply of goods, or of services, or of both takes place in course of interstate tra....
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....de or commerce." BRIEF ANALYSIS With the beginning of GST, now taxes on supply of goods and service in course of interstate trade or commerce would also required to be made a commodity of due apportionment between union and states instead of pure assignment as in cases of goods. This article 269A is inserted precisely to mitigate this aspect. The apportionment shall be undertaken pursuant to GST Council's recommendation. To understand what transaction would constitute interstate trade, the rules of supply, origin and point of incidence would be required to be framed. The same would be in parliament's domain. Surcharge by Parliament not to Apply to GST Article 271 empowers the parliament to increase taxes and duties on articles. The GST has been made an exception to power of parliament. Hence, the parliament cannot impose surcharge on GST. Constituting the 'GST Council' vide Article 279A BRIEF ANALYSIS Article 279A is to be inserted to empower the Hon'ble President of India to constitute ' GST Council'. Brief features shall be :- * To be incorporated within 60 days of Commencement of Act. * Members shall include:- * FM - Chairperson * Union Minister of st....
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....ate in charge of revenue - Members * State FM's / Nominated State Ministers - Members * Members to choose Vice Chairperson * Recommendations on :- * 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; * the goods and services that may be subjected to, or exempted from the goods and services tax * 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 * the threshold limit of turnover below which goods and services may be exempted from goods and services tax * the rates including floor rates with bands of goods and services tax * any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster * 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 * Any other matter relating to the goods and services tax, as the Council may decide. * Date of levy of GST on items like petrol, diesel and na....
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....tural gas. * Quorum shall be 50% of members * Decision by 75% of total weighted votes of members present and voting. Centre to have 1/3rd of weight of total votes and states to have 2/3rd of total votes cast. * Dispute resolution modalities. New Definitions - Article 366 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 Hence it would exclude alcoholic liquor currently. '(26A) "Services" means anything other than goods Anything other than goods is service reflects wide interpretation of what constitutes services. Amendments in Union, State List of Schedule VII of Constitution. Also, amendment in Sixth Schedule. BRIEF ANALYSIS Schedule VI Para 8(3) of Schedule VI empowers the district councils to levy and collect taxes on certain items. One insertion in further proposed in the same i.e. "Taxes on entertainment and amusements" Schedule VII - Union List * Duties of excise on goods manufactured in India done away except petroleum, High speed diesel, petrol, natural gas, aviation turbine fuel and tobacco or tobacco products. (No. 84) * Taxes on the sale o....
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....r purchase of newspapers and on advertisements published therein - Done Away (No. 92) * Entry related to interstate purchase and sale of goods (92C) - Done Away Schedule VII - State List * Entry Tax - Done Away (No. 52) * Taxes on advertisements - Done away (No. 55) * Taxes on entertainment and amusements (Entry No. 62) - Applicable to the extent levied and collected by district / regional councils. * Entry No. 54 on sale of goods, now scope reduced to petroleum, High speed diesel, petrol, natural gas, aviation turbine fuel and tobacco or tobacco products except in case of interstate trade or international trade or commerce. Other Modalities * An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (I) of Article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend and such tax shall be assigned to the states in manner as provided hereunder in (b) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable t....
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....o the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). Key Note: - This is exemption pertaining to the additional tax as referred above. 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. Parliament may, by law, on the recommendation of the Goods and Services Tax 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. Necessary provisions for transition and power of president to remove difficulties incorporated. -- About the Author: CA Ankit Gulgulia Author is Practicing Chartered Accountant in New Delhi/NCR and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at [email protected] or at +91-9811653975 DISCLAIMER: This article is provided p....
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....urely for your information only and you should check other information sources before taking any action based on any of the content in this article. Neither the authors nor website hosting the article make any warranty as to the quality or currency of the information contained in any of the site's articles. ============= Document 1 TO BE INTRODUCED IN LOK SABHA Bill No. 192 of 2014 THE CONSTITUTION (ONE HUNDRED AND TWENTY-SECOND AMENDMENT) BILL, 2014 5 10 A BILL further to amend the Constitution of India. BE it enacted by Parliament in the Sixty-fifth Year of the Republic of India as follows:--- 1. () This Act may be called the Constitution (One Hundred and Twenty-second Amendment) Act, 2014. (2) It shall come into force on such date as the Central Government may, by notification in the Official 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 conta....
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....ined 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. 2 (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. Explanation. The provisions of this article, shall, in respect of goods and services tax referred to in clause (5), of article 279A, take effect from the date recommended by the Goods and Services Tax Council.â€. 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. 4. In article 249 of the Constitution, in clause (1), after th....
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....e words "with respect to", the words. figures and letter"goods and services tax provided under article 246A or" shall be inserted. 5. In article 250 of the Constitution, in clause (1), after the words "with respect to", the words, figures and letter "goods and services tax provided under article 246A or" shall be inserted. 6. In article 268 of the Constitution, in clause (1), the words "and such duties of excise on medicinal and toilet preparations" shall be omitted. 5 10 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:--- 20 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....
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.... 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. 25 Amendment of article 270. Amendment of article 271. 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.". 10. In article 270 of the Contitution,- (i) in clause (1), for the words, figures and letter "articles 268, 268A and article 269", the words, figures and letter "articles 268, 269 and article 269A" shall be substituted; (ii) after clause (1), the following clause shall be inserted, namely:- "(IA) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner pro....
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....vided in clause (2).". 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. 30 35 40 5 10 15 20 25 30 35 40 3 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) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. (4) The Goods and Services ....
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....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 (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 pet....
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....roleum 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 of new article 279A. Goods and Services Tax Council. Amendment of article 286. 4 (9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:-- (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 ....
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....meeting. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of (a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council may decide about the modalities 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. 10 15 20 25 Amendment of article 366. 14. In article 366 of the Constitution.--- (i) after clause (12), the ....
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....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;'; 30 (ii) after clause (26), the following clauses shall be inserted, namely:- *(26A) "Services" means anything other than goods; (26B) State" with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature;'. 35 Amendment of article 368. Amendment of Sixth Schedule. 15. In article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and figures "article 162 or article 241", the words, figures and letter "article 162, article 241 or article 279A" shall be substituted. 16. In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),— (i) in clause (c), the word "and" occurring at the end shall be omitted; (ii) in clause (d), the word "and" shall be inserted at the end; (iii) after clause (d), the following clause shall be inserted, namely:- "(e) taxes on entertainment and amusements." 40 5 17. In the Seventh Schedule to the Constitution,- (a) in List - ....
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....Union List,- Amendment of Seventh Schedule. 10 15 20 25 (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 entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.". 18. (1) An addition....
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....al tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and 30 such tax shall be assigned to the States in the manner provided in clause (2). 35 (2) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. (3) The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (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 ....
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....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. 6 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 with the provisions of the Constitution as amended by this Act shall continue to be inforce until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier. 21. (1) If any difficulty arises in giving effect to the provisions of the Constitution 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 provi....
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....sions 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 as amended by this Act 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 (/) shall, as soon as may be after it is made. be laid before each House of Parliament. 5 10 15 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 servic....
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....es 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, inter alia, provides (a) subsuming of various Central indirect taxes and levies such as 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; (b) subsuming of 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; (c) dispensing with the concept of 'declared goods of special importance' under the Constitution; (d) levy of Integrated Goods and Services Tax on inter-S....
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....tate transactions of goods and services; (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 services tax and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits. The Council shall function under ....
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....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. It is further provided that every decision of the Council shall be taken by a majority of 7 8 not less than three-fourths of the weighted votes of the members present and voting in accordance with the following principles:- Illustration: (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. In terms of clause (9) of the proposed article 279A, the "weighted votes of the members present and 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. 1 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 ....
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....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. 3 (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. NEW DELHI The 18th December, 2014 ARUN JAITLEY PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA [Copy of letter No. S-31011/07/2014-SO(ST), dated the 18th December, 2014 from Shri Arun Jaitley, 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 (1) of article 274, of the Constitution of India, the introduction of the Constitution (One Hundred and Twenty-second Amen....
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....dment) Bill, 2014 in Lok Sabha and also the consideration of the Bill. FINANCIAL MEMORANDUM Clause 12 of the Bill seeks to insert a new article 279A in the Constitution relating to Constitution of Goods and Services Tax Council. The Council shall function under the Chairmanship of the Union Finance Minister and will have the Union Minister of State incharge 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. 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 ....
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....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. 9 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. Clause (1) of the proposed new article 279A provides that the President, shall 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. Clause (8) of the said article provides that the Council shall determine the procedure in the performance of its functions. 2. The procedures, as may be laid down by the Goods and Services Tax Council in the performance of its functions, are matters of procedure and details. The delegation of legislative power is, therefore, of a normal character. 10 ANNEXURE EXTRACTS FROM THE CONSTITUTION OF INDIA * 248. (1) Parliament has exclusive power to make any law with respect to any matter not en....
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....umerated in the Concurrent List or State 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 Revenues between the Union and the States 268. (1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union Lis....
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....t shall be levied by the Government of India but shall be collected--- (a) in the case where such duties are leviable within any Union territory, by the Government of India, and (b) in other cases, by the States within which such duties are respectively leviable. * 268A. (1) Taxes on services shall be levied by the Government of India and such tax shall be collected and appropriated by the Government of India and the States, in the manner provided in clause (2). (2) The proceeds in any financial year of any such tax levied in accordance with the provisions of clause (1) shall be-- (a) collected by the Government of India and the States; (b) appropriated by the Government of India and the States, in accordance with such principles of collection and appropriation as may be formulated by Parliament by law. 269. (1) Taxes 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,-- 11 Power of Parli....
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....ament 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. 12 (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 goods" shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce. * Taxes levied and distributed between the Union and the States. Surcharge on certain duties and taxes for purposes of the Union. 270. (1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268, 268A and 269, respectively, surcharge on taxes and duties referred to in article ....
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....271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2). 271. Notwithstanding anything in articles 269 and 270. Parliament may at any time increase any of the duties or taxes referred to in those articles 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. 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 Parliamen....
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....t 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 subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. * PART XX AMENDMENT OF THE CONSTITUTION Power of Parliament to amend the Constitution and procedure therefore. 368. (1) * (2) An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill: Provided that if such amendment seeks to make any change in- (a) article 54, article 55, article 73, article 162 or article 241, or 13 (b) Chapter IV of Part V, Chapt....
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....er V of Part VI, or Chapter I of Part XI, or (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. * 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. SEVENTH SCHEDULE (Article 246). List - Union List. * * * 84. Duties of excise on tobacco and other goods manufactured or produced in India except....
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....- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. * 92. Taxes on the sale or purchase of newspapers and on advertisements published therein. * 92C. Taxes on services. List II-State List * 52. Taxes on the entry of goods into a local area for consumption, use or sale therein. * * 14 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. 55. Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television. * * 62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling. *<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....