GST - its Legal Path

The Path taken till now briefly

It all started in 2000 when the then Vajpayee Government visualised implementation of GST and set up Empowered Committee headed by Dr.Asim Dasgupta. 

Task Force headed by Vijay Kelkar in 2004 recommended intergration of indirect taxes in India and set up GST

Finance Minister P Chidambaram in his budget speech on 28th February 2006 informed the house that GST will be implemented from 1st April 2010.

Consequent to the above announcement by Finance Minister an Empowered Committee was set up comprising State Finance Ministers and Central Government representatives. The Empowered Committee after much deliberation issued the First Discussion Paper in November 2009. 

Constitution (115th Amendment) Bill was introduced in Parliament by Finance Minister (UPA Government) on 22nd March 2011 to amend constitution to pave way for implementation of GST.

Constitution (122nd Amendment) Bill was introduced in Parliament by Finance Minister (NDA Government as earlier amendment bill lapsed due to completion of Parliament term) on 19th December 2014 to amend constitution to pave way for implementation of GST

Finally, The constitution (One Hundred and First Amendment) Act 2016 was enacted paving the way for implementation of GST in India.  

• Passed in Rajya Sabha on 3rd August 2016 
• Passed by Lok Sabha on 8th August 2016 
• Received ratification by 18 States by 8th September (subsequently ratified by another 5 States)
• on 8th September President gave his assent to the bill 
• Notified as an Act on 8th September in Gazette 

The Constitution (One Hundred and First Amendment) Act, 2016 - Key Changes

• Introduction of Article 246A, 
• this gives powers for State Governments to make laws in respect to any matters listed in List 1 of Seventh Schedule (Central List) - in short it gives power to State Governments to tax Services also
• 246A(2) gives power to Centre to tax interstate sales exclusively, States cannot tax interstate Sales

• Deletion of Article 268A as it gives power to Central Government to levy Service tax, but no Service Tax exists under GST

• Article 269A introduced which gives power to charge IGST by Central Government. Also this Article gives power to charge IGST by Central Government on Imports

• Article 279A introduced for creation of GST council which is a constitutional body and which will be a joint forum of Central & State Governments.  It is a recommendatory body with Union Finance Minister as Chairperson and having representation from all States.  This GST council is empowered to make recommendations on issues of significance on GST

• Amendment to Article 271, this withdraws the power of Central Government to levy Surcharge on GST.  Which means no Surcharge on GST at any time

• Article 366(12A) introduced to define GST -  "any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption"

• Article 366(26A) introduced to define services - "services means anything other than goods"

• Entry 84 to Seventh Schedule amended to include Petroleum and Petroleum products (Crude Petroleum, Petrol, Diesel and ATF) under purview of GST.  However the act specifically provides that levy of GST on these products shall be decided by GST council and will be notified later