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The Constitution (122nd Amendment) (GST) Bill, 2014

The Constitution (122nd Amendment) (GST) Bill of the year 2014 was drafted to amend the grundnorm of Indian legal framework, i.e. the Constitution of India. This bill was introduced on 19th day of December, 2014 and it was also passed by Lok Sabha on 6th day of May, 2015. In the object of this bill, it is to further amend the provision of the Indian Constitution. Through this bill, the Constitution of India is proposed to be amended for introducing the goods and services tax for conferring concurrent taxing powers on the Union and also on the States and Union Territories with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or/ and services. And in its highlights it can be seen that it is basically drafted to amend the grundnorm to introduce the Goods and Services Tax- GST, for which currently, the Centre is having power to legislate and levy an integrated GST i.e. IGST on interstate supply of goods and services. And with the passing of this bill, the Centre and States both will be enjoying concurrent powers to make such GST based laws. There are some clauses proposed to modify the provision of the Constitution of India, and they can be discussed as under:

Leaving aside the common introductory clauses, this Amending bill is proposing the insertion of the new Article in the constitution after its existing Article 246, as Article 246A which is making ‘special provisions with respect to goods and services tax’. As per this new Article, the Parliament and Legislature of every State will be invested with the powers to make laws in this connection. And as such the concerned States and Union will be empowered to levy and collect GST. Secondly, it is also empowering the Parliament to make laws in relation to the interstate supply of goods and services. Moreover, this concerned bill is also proposing the further consequential amendments in connection with the insertion of this Article.

Also, as per the 9th clause of this bill, it is seeking the insertion of another new provision as Article 269A, after existing provision, Article 269 of the Constitution. And this new Article 269A is to make provisions for ‘levy and collection of goods and services tax in course of inter-state trade or commerce’. Thus, this provisions says that the Government of India is empowered to levy and collect the goods and service tax on supplies in the course of inter- state trade or commerce. Moreover, it is also proposed by this clause that such tax should be apportioned between the Union and the States in the manner as may be provided by Parliament’s made law, on the recommendations of the Goods and Services Tax Council. Also, further consequential amendments are also sought through other clauses enshrined in the said Amending Bill.

Also, in relation to the Alcohol for human consumption, the GST tax purview is not covering the same and hence it is exempted. And as said herein above, in the secondly sought insertion of the provision, the GST Council will be recommending the tax rates, levy of additional tax period, supply principles, special provisions in connection with the certain states, etc. And this said GST Council will be comprising of Union Finance Minister, Union Minister of State for Revenue and State Finance Ministers. And this council should be constituted as per new proposed provision as Article 279A, where the President of India is required to constitute such council. Moreover, as per further clauses, this proposed bill will be empowering the Centre to impose an additional tax of up to 1 per cent on the inter- state supply of goods for two years or more. And this tax will accrue to states from where the supply originates. Moreover, the provisions are also proposed to be made which will be requiring the payment of the compensation to the States by making laws by Parliament. And such compensation will be against their loss of revenue from the introduction of GST up to a five year period.

Adv. Faim Khalilkhan Pathan