GST – Introduction


The progress of the 122nd Constitutional Amendment Bill (“GST Bill”) through the Lok Sabha and the Rajya Sabha has probably been the most closely watched legislative function in the history if independent India.

As the GST Bill is at the cusp of being passed by the Rajya Sabha, it is imperative to understand the key features, issues and complexities as emerging from the GST Bill. In this article, we have tried to capture these aspects in an easy-to-read, bullet-point based style.


The GST Bill proposes the following changes in the existing Constitution of India

Deletion of 1 Article

Amendment of 10 Articles

Amendment of 2 Schedules

Insertion of 3 new Articles

Article 246A: Special provision creating legislative competence to levy Goods and Services Tax

Article 269A: Levy and collection of Goods and Service tax in the course or interstate trade and commerce

Article 279A: Goods and Service Tax Council


 Dual GST: Both the Centre and States given concurrent powers to levy GST

IGST: Centre given exclusive powers to levy GST on supplies in the course of inter-State trade and commerce and imports into India

GST defined as any tax on supply of goods and services other than on alcohol for human consumption

Effective date of these powers to be the date recommended by the GST Council

Centre empowered to formulate rules for the Place of Supply


GST shall subsume various indirect taxes being levied by the Union and the State governments as under:

Central Taxes, List I – 6 items

•     Central Excise Duty (Entry 84)

•     Additional Excise Duties (Entry 84)

•     CVD / SAD of Customs (Entry 83)

•     Service Tax (Entry 92C)

•     Central Surcharges and Cesses in so far as they relate to supply of goods and services  (Article 271)

State Taxes, List II – 7 items

•       State VAT / Sales Tax (Entry 54)

•       Entertainment Tax (other than the tax levied by the local bodies (Entry 62)

•       Octroi and Entry Tax (Entry 52)

•       Purchase Tax ( Entry 54)

•       State Surcharges and Cesses in so far as they relate to supply of goods and services

•       Taxes on lottery, betting and gambling (Entry 62)

•       Luxury Tax (Entry 62)

Key taxing powers currently not merged in GST (and therefore to continue with the Union or State as the case may be):


Excise duty on petroleum products (Union)

Tax on sale of petroleum products (State)

Tax on alcoholic liquor for human consumption (State)

Tax on entertainment and amusement levied and collected by     Panchayat/Municipality/ Regional Council/ District Council

Stamp Duties


Central ‘non-GST’ taxes


•     Entry 83- Duties of customs including export duties. (usually referred to as Basic Customs Duty)

•     Entry 89- Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights.

•     Entry 90- Taxes other than stamp duties on transactions in stock exchanges and futures markets.

•     Entry 92A- Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce.

•     Entry 92B- 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.

State ‘non-GST’ taxes


•       Entry 49- Taxes on lands and buildings.

•       Entry 53- Taxes on the consumption or sale of electricity.

•       Entry 56- Taxes on goods and passengers carried by road or on inland waterways.

•       Entry 57- Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III.

•       Entry 59- Tolls.

•       Entry 60- Taxes on professions, trades, callings and employments

•       Entry 63- Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty

Thus, even though the taxable event under GST is ‘supply’, as per the Constitutional scheme sought to be ushered in by the GST Bill, the Central Government will retain the power to tax inter-state sale / consignment of goods.


The GST Bill included a proposal for 1% additional tax on inter-state supply of goods and services the revenues from which was to be assigned to the origin state. This tax was to be limited for two years or such longer period recommended by the GST Council [From the commencement of Constitutional Amendment Act].

This concept was not aligned to the proposal of making GST a destination based consumption tax and has been criticised heavily – this has now been dropped as a part of the changes that were introduced yesterday.


The proposed new Article 279A envisages the constitution of a Goods and Service Tax Council to be formed by the President within 60 days from the coming into force of the Constitutional Amendments envisaged under the GST Bill. This Council shall consist of:

The Union Minister of Finance (Chairperson)

The Union Minister of State for Revenue/Finance

The State Ministers (of Finance or any other Minister nominated)

This GST Council’s role is to make recommendations on all aspects of GST:


Rates, rate bands, base, thresholds, taxes to be subsumed;

Special provisions for Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand

Date for application of GST to petroleum products


Last but not the least, the definitional aspects of GST as emerging from the Constitution post taking into account the amendments proposed by the GST Bill are encapsulated below:

‘GST’ is defined under the proposed 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.”

‘Goods’ have always been defined under Article 366 (12): “Includes all materials, commodities and articles

‘Services’ is defined under the proposed Article 366(26A): “anything other than goods


As we close the discussion on key features, issues and complexities as emerging from the 122nd Constitutional Amendment Bill, one question remains unanswered:

Article 366(29A) defines “Tax on the sale or purchase of goods” and includes ‘deemed sales’ including ‘works contracts’. Since this article is not proposed to be deleted under the GST Bill – Can Central government levy sales tax on inter-state works contracts in the future since entry 92A retained?

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