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

Existing Extract from Article 268(1)

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—

(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.

Proposed Amendment to Article 268(1)

In article 268 of the Constitution, in clause (1), the words “and such duties of excise on medicinal and toilet preparations” shall be omitted.

Therefore Clause shall be read as follows:

Such stamp duties as are mentioned in the Union List 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.

Article 250 Power of Parliament to Legislate with respect to any matter in the State List if a Proclamation of Emergency is in Operation

Existing Extract from Article 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.

Proposed Amendment to Article 250(1)

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.

Therefore Clause shall be read as follows:

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 goods and services tax provided under Article 246A or any of the matters enumerated in the State List.

Article 249 Power of Parliament to Legislate with respect to a matter in the State List in the National Interest.

Existing Extract from Article 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.

Proposed Amendment to Article 249(1)

In article 249 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.

Therefore Clause shall be read as follows:

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 goods and services tax provided under Article 246A or 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.

Article 248 Residuary powers of legislation.

Existing Extract from Article 248(1)

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

Proposed Amendment to Article 248(1)

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.

Therefore Clause shall be read as follows:

 "Subject to article 246A" ,Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

Article 269A – Levy and Collection of Goods and Services Tax in course of Inter-State Trade or Commerce.

(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.

Article 246A – Special Provision with Respect to Goods and Services 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.

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.’’.

Reference of Article 246 & Article 254

Article 246
Subject matter of laws made by Parliament and by the Legislatures of States (In Brief)

Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the Union List)

The Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the Concurrent List)

Parliament has power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List

Article 254
Inconsistency between laws made by Parliament and laws made by the Legislatures of States (In Brief)

(1)If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause ( 2 ), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void

(2)Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State

Article 279A – Goods and Services Tax Council

(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) Chairperson- Union Finance Minister;

(b) Member From Central Govt- Union Minister of State in charge of Revenue or Finance;

(c) Members from State Govt – Minister in charge of Finance or Taxation or any other Minister nominated by each State Government.

(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. (ie Vice Chairperson will be from Member from State Govt)

(4) 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

(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 petroleum 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(GSTC) shall constitute the quorum at its meetings.

(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

(9) Every decision of the Goods and Services Tax Council (GSTC) 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 meeting.

(Refer : Illustration at the end for better understanding)

(10) No act or proceedings of the Goods and Services Tax Council (GSTC) 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.


Illustration for Clause 9 of 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 =(WST/SP) × SF

Wherein—
WT = Total weighted votes of all members in favour of a proposal.
WC = Weighted vote of the Union = 1/3 i.e., 33.33% if the Union is in favour of the proposal and be taken as “0” if, Union is not in 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. 2/3, i.e., 66.67%
SF = Number of States voting in favour of a proposal.

Analysis of Proposed 122nd Constitutional Amendment – Goods & Service Tax (GST) bill

Insertion of New Articles

1) Article 279A – Goods and Services Tax Council

2) Article 246A – Special Provision with Respect to Goods and Services Tax

3) Article 269A – Levy and Collection of Goods and Services Tax in course of Inter-State Trade or Commerce

Amendment to Existing Articles

1) Article 248 Residuary powers of legislation

2) Article 249 Power of Parliament to Legislate with respect to a matter in the State List in the National Interest

3) Article 250 Power of Parliament to Legislate with respect to any matter in the State List if a Proclamation of Emergency is in Operation

4) Article 268 Duties levied by the Union but collected and appropriated by the States

5) Article 269 Taxes levied and collected by the Union but assigned to the States

6) Article 270 Taxes levied and distributed between the Union and the States

7) Article 271 Surcharge on certain duties and taxes for purposes of the Union

8) Article 286 Restrictions as to imposition of tax on the Sale or Purchase of Goods

9) Article 366 Meaning of Goods and Services Tax(GST) & Services

10) Article 368 Power of Parliament to amend the Constitution and procedure therefore

11) Amendment to Sixth Schedule to the Constitution

12) Amendment to Seventh Schedule to the Constitution

Omission of Articles

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

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

 

Statement of Objects & Reasons on Proposed 122nd Amendement of Constitution in order to Introduce GST

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 services 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.

The Proposed GST Bill , provides for—

(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-State 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

Speech by the Minister of Finance Arun Jaitley in Lok Sabha on 122nd Amendment of the Constitution – GST Bill 2014

SPEECH BY THE MINISTER OF FINANCE ARUN JAITELY INTRODUCTION OF Goods & Service Tax Bill (GST) 2014 BILL in Lok Sabha

Arun Jaitely,Minister of Finance

There are two important points which I want to make in response to the Members. Any Bill can be opposed if it lacks either legislative competence of the Parliament or if it violates fundamental rights in the context of an ordinary legislation and basic structure as far as the constitution amendment is concerned.None of the objections come within that parameter.

Let me remind the hon. Members that this Bill has earlier been introduced and cleared by the Standing Committee. The object behind the GST is to have a seamless transfer of goods and services across the country.

Let there be no tax on tax. On the destination principle, the tax is at the last stage.

The Standing Committee has cleared it and was discussed repeatedly, the former Finance Minister discussed it repeatedly with the Empowered Committee and the State Governments.

I have met several Chief Ministers and Finance Ministers and discussed this issue with them individually also. A smaller group came and met me, which comprised of people from various political parties. They wanted some change in the language which was to give more liberal rights to the States. I acknowledged that request. We have made sure that no State will lose a rupee of revenue.

Service tax is entirely in the domain of the Centre today. It is going to be shared with States now. From 2010 to 2013, the CST compensation which was payable to the States, amongst the various debts which have been left behind on my table by the UPA, this is one of them. They have not paid.

I will try to pay in this financial year itself. We will make sure that no State loses. We are interested in strengthening the States because then only the national economy will be strengthened. The Government will be open to all suggestions till the very last minute.

Just as in the case of VAT which was the fear of the unknown that will go down, the Centre benefited, the States benefited. We will address the concerns of each State. We will ensure that their rights are preserved. No State is a loser.