The amendment Act is named as The Constitution (One Hundred and First Amendmet) Act, 2016. The text of the newly introduced article providing power to levy goods and services tax is as follows:
Special provision with respect to goods and services tax.
“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 .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.
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.”.
Article 246A shall override the taxing powers as provided in Article 246
It is important to note that the newly introduced article starts with an non-obstanate clause and thus, overrides Articles 246 and 254 (which deals with taxing powers) of the Constitution. The Hon’ble Supreme Court in Chandavarkar S.R. Rao v. Ashalata S. Guram[1986 4 SCC 447] observed that a clause beginning with the expression ‘notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract’ is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non-obstante clause. Hon’ble Court observed that it is equivalent to saying that inspite of the provision of the Act or any other Act mentioned in the non-obstante clause or any contract or document mentioned in the enactment following it will have its full operation or that the provisions embraced in the non-obstante clause would not be an impediment for an operation of the enactment. Thus, since a non-obstante clause is a legislative device to give overriding effect to certain provisions, in case of any conflict between Article 246 and Article 246A, the latter shall prevail.
Features of Amendment Act
Retention of Dual structure of Constitution
- While the Constitution has been amended by the GST Constitutional Amendment Act, it still retains the taxing powers with both Centre and State and thus, respects the basic structure of dual taxation embodied in the Constitution.
Enactment of Act
- That Amendment Act has been enacted from September 8, 2016
Power to tax Supply of goods and services
- A new Article 246A has been introduced which shall empower Parliament and state legislatures to have concurrent powers to make laws on GST.
- The Article however further provides that only the centre may levy an integrated GST (IGST) on the interstate supply of goods and services, and imports.
- Power of Parliament to make law with respect to any matter not enumerated in the Concurrent List or State List has been made subordinate to Article 246A.
- Power of Parliament to legislate with respect to a matter in the State List in the national interest has been extended to GST also.
- Power has been given to Parliament to legislate with respect to GST if a Proclamation of Emergency is in operation
Taxes Subsumed in GST:
- The following Central levies shall cease to be levied post levy of GST:
- Central Excise Duty
- Additional Excise Duty
- The Excise Duty levied under the Medicinal and Toiletries Preparation Act
- Service Tax
- Additional Customs Duty, commonly known as Countervailing Duty
- Special Additional Duty of Customs-4% (SAD)
- Cesses and surcharges in so far as they relate to supply of goods and services
- The following State levies shall cease to be levied post levy of GST:
- VAT/Sales Tax
- Central Sales Tax (levied by the Centre and collected by the States)
- Entertainment Tax
- Octroi and Entry Tax (all forms)
- Purchase Tax
- Luxury Tax
- Taxes on lottery, betting and gambling
- State cesses and surcharges in so far as they relate to supply of goods and services
Goods kept outside GST
- Alcohol for human consumption has been kept outside the purview of GST.
- It has also been provided that GST will apply to five petroleum products at a later date viz.,
- petroleum crude;
- high speed diesel;
- motor spirit (commonly known as petrol);
- natural gas;
- aviation turbine fuel;.
- The Act has kept tobacco and tobacco products outside the purview of GST.
- Act has withdrawn the power to tax entertainment and amunsement from States but retains the power to levy taxes on entertainments and amusements by a Panchayat or a Municipality or a Regional Council or a District Council.
Duties of Excise to continue on following goods:
(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
Hon’ble President has constituted the Goods and Services Tax Council on September 16, 2016. The other notable features of the Council are:
- GST Council shall have Union Finance Minister, Union Minister of State in charge of Revenue and Minister in charge of Finance or Taxation or any other Minister nominated by each State Government as its members.
- Goods and Services Tax Council shall also recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.
- Quoram for meeting of the Council shall be 50% of the total members. 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. Herein, while the total weigth of votes of all states shall be two third, weightage of vote of Central government shall be one third.
- It shall make recommendation to the Centre and State on the following issues:
- 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 Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A 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.
Compensation to States
- Parliament may, by law, provide compensation to states for any loss of revenue from the introduction of GST, up to a five year period.
- Accounts and Records
- Anti Profiteeing Clause
- Classification of Supply
- Composition Levy
- Complaince Manual
- Demand and Recovery
- Determination of Valuation of Supply
- Extent of Levy
- Input tax Credit
- Late fees, Penalties and Prosecution under the GST Law
- Levy of GST
- Levy of Tax under Constitution prior to GST
- Payment of Tax under GST
- Place of Supply
- Position of taxing articles post Constitutional Amendment
- Rate of Tax in GST
- Registration under GST
- Returns under GST Law
- Structure of GST Law
- Taxable Supply
- TCS in case of E Commerce operator
- Time of Supply
- Transitional Provisions
- Understanding GST
- Who is a Taxable Person