Extent of Levy
Levy has to be understood in relation to the four laws as applicable in coming times, viz: CGST, SGST, IGST, UTGST.
Extent of Levy of CGST
Section 1(2) of CGST Law provides that the Finance Act, 1994 extends to the whole of India except the State of Jammu and Kashmir. Further, Section 9 provides that the levy applies to all intra state supply of goods or services. Hence on a combined reading of the two sub-sections, it can be held that the supply of goods and services provided in India shall be exigible to CGST. The key term here is INDIA. We need to understand this term and extent of the territory covered in the definition. India has been defined in Section 2 of CGST Law as under:
“(56) “India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters;”
We shall now examine the above clauses in length in the following points.
- The territory of the Union as referred to in Article 1 of the Constitution:
The relevant clauses as specified above, of the constitution are provided as under:
“(2) The States and the territories thereof shall be as specified in the First Schedule.
(3) The territory of India shall comprise—
(a) The territories of the States;
(b) The Union territories specified in the First Schedule; and
(c) Such other territories as may be acquired.”Thus, the relevant schedule provides for 28 states and 7 union territories. List as provided in the First schedule is provided as Annexure II to this chapter.
- Its territorial waters, continental shelf, exclusive economic zone or any other maritime zone
The relevant definitions of the above terms as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976) is provided herein under. However it is also pertinent to note that wherever the term limit has been used, the same refers to the mainland of India as well as the individual or composite group or groups of islands constituting part of the territory of India and need to be read in the same spirit. The relevant definitions are as follows:
- Territorial Waters: The limit of the territorial waters is the line every point of which is at a distance of twelve nautical miles from the nearest point of the appropriate baseline.
- Continental Shelf: The continental shelf of India (hereinafter referred to as the continental shelf) comprises the seabed and subsoil of the submarine areas that extend beyond the limit of its territorial waters throughout the natural prolongation of its land territory to the outer edge of the continental margin or to a distance of two hundred nautical miles from the baseline referred to in sub-section (2) of section 3 where the outer edge of the continental margin does not extend up to that distance. Section 3(2) provides the limit of territorial waters as provided above.
- Exclusive Economic Zone: The exclusive economic zone of India is an area beyond and adjacent to the territorial waters, and the limit of such zone is two hundred nautical miles from the baseline referred to in sub-section (2) of section3.
The extent of the above limits is explained as under:
- The seabed and the subsoil underlying the territorial waters
The definition of “Territorial waters” of India has been explained in the above paragraph and has been defined to include area upto 12 nautical miles from the baseline. Since the term territorial water does not provide mention of seabed and subsoil and provides mention in terms of nautical miles, one can possibly argue that activities carried on the seabed and subsoil does not fall within the ambit of territorial waters. Accordingly, there has been a specific mention of seabed and subsoil within such area to avoid any technical argument that territorial waters does not include the seasoil and seabed underlying such waters. Thus, any activity carried out on subsoil and seabed would fall within the jurisdictional limits of this Act by virtue of this sub clause.
- The air space above its territory and territorial waters; and
In line with para c above, like subsoil and seabed, air space above the territory and territorial waters are also included in the definition of India and thus, within the territorial jurisdiction of the Act. Airspace means the portion of the atmosphere controlled by a country above its territory including territorial waters. The extent of airspace extends till altitude of 100 Km and is considered as the boundary between the Earth’s atmosphere and the outer space by The Fédération Aéronautique Internationale. However countries may follow their own definition in this regard in terms of extent of atmosphere, however, it is clearly understood that beyond airspace, the open space is not included in the sovereign territory of any country and thus, any activity carried out in space would not fall within the territory of India as well. Services as provided in airspace could include airwaves, air advertisement, air travel etc.
Extent of Levy of IGST
IGST is leviable again on whole of India except the state of Jammu and Kasmir. The extent of its application shall be similar to CGST
Extent of Levy of UTGST
UTGST is leviable on a Union Terrtiory. Same Act covers all Union Territories. Section 2(114) defines Union Territory to mean the territory of— (a) the Andaman and Nicobar Islands; (b) Lakshadweep; (c) Dadra and Nagar Haveli; (d) Daman and Diu (e) Chandigarh; and (f) other territory. Each of the said territory shall be considered to be a separate Union territory;
Extent of Levy of SGST
SGST is leviable on a State. For every state, there shall be a different SGST Act and it shall be titled on the name of the state like Delhi GST Act etc. Its juridication or extent of levy shall be the limits of such state only.
Summary of Extent of Levy
|Law||Extent of Levy|
|Extent of Levy||Type of Transaction||Not Applicable to|
|CGST||India||Intra state||Jammu and Kashmir, Rest of Work|
|SGST||Particular state||Intra State||Rest of India|
|UTGST||Particular state||Intra State||Rest of India|
|IGST||India||Inter state||Jammu and Kashmir, Rest of Work|
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