ConstitutionalAmendments

TheConstitution(122ndAmendment)(GST)Bill,2014
TheConstitution(OneHundredandTwentySecondAmendment)Bill,2014was
introducedintheLokSabhaonDecember19,2014bytheMinisterofFinance,Mr.
ArunJaitley.
TheBillseekstoamendtheConstitutiontointroducethegoodsandservicestax
(GST).Consequently,theGSTsubsumesvariouscentralindirecttaxesincludingthe
CentralExciseDuty,CountervailingDuty,ServiceTax,etc.Italsosubsumesstate
valueaddedtax,octroiandentrytax,luxurytax,etc.
ConcurrentpowersforGST:TheBillinsertsanewArticleintheConstitutiontogive
thecentralandstategovernmentstheconcurrentpowertomakelawsonthetaxation
ofgoodsandservices.
IntegratedGST(IGST):However,onlythecentremaylevyandcollectGSTonsupplies
inthecourseofinterstatetradeorcommerce.Thetaxcollectedwouldbedivided
betweenthecentreandthestatesinamannertobeprovidedbyParliament,bylaw,on
therecommendationsoftheGSTCouncil.
GSTCouncil:ThePresidentmustconstituteaGoodsandServicesTaxCouncilwithin
sixtydaysofthisActcomingintoforce.TheGSTCouncilaimtodevelopaharmonized
nationalmarketofgoodsandservices.
CompositionoftheGSTCouncil:TheGSTCouncilistoconsistofthefollowingthree
members:(i)theUnionFinanceMinister(asChairman),(ii)theUnionMinisterof
StateinchargeofRevenueorFinance,and(iii)theMinisterinchargeofFinanceor
Taxationoranyother,nominatedbyeachstategovernment.
FunctionsoftheGSTCouncil:Theseincludemakingrecommendationson:(i)taxes,
cesses,andsurchargesleviedbythecentre,statesandlocalbodieswhichmaybe
subsumedintheGST(ii)goodsandserviceswhichmaybesubjectedtoorexempted
fromGST(iii)modelGSTlaws,principlesoflevy,apportionmentofIGSTand
principlesthatgoverntheplaceofsupply(iv)thethresholdlimitofturnoverbelow
whichgoodsandservicesmaybeexemptedfromGST(v)ratesincludingfloorrates
withbandsofGST(vi)specialratestoraiseadditionalresourcesduringanynatural
calamity(vii)specialprovisionwithrespecttoArunachalPradesh,Jammuand
Kashmir,Manipur,Meghalaya,Mizoram,Nagaland,Sikkim,Tripura,Himachal
PradeshandUttarakhandand(viii)anyothermatters.
Resolutionofdisputes:TheGSTCouncilmaydecideuponthemodalitiesforthe
resolutionofdisputesarisingoutofitsrecommendations.

Restrictionsonimpositionoftax:TheConstitutionimposescertainrestrictionson
statesontheimpositionoftaxonthesaleorpurchaseofgoods.TheBillamendsthis
provisiontorestricttheimpositionoftaxonthesupplyofgoodsandservicesandnot
onitssale.
AdditionalTaxonsupplyofgoods:Anadditionaltax(nottoexceed1%)onthesupply
ofgoodsinthecourseofinterstatetradeorcommercewouldbeleviedandcollected
bythecentre.Suchadditionaltaxshallbeassignedtothestatesfortwoyears,oras
recommendedbytheGSTCouncil.
Compensationtostates:Parliamentmay,bylaw,provideforcompensationtostates
forrevenuelossesarisingoutoftheimplementationoftheGST,ontheGSTCouncils
recommendations.Thiswouldbeuptoafiveyearperiod.
Goodsexempt:Alcoholicliquorforhumanconsumptionisexemptedfromthepurview
oftheGST.Further,theGSTCouncilistodecidewhenGSTwouldbeleviedon:(i)
petroleumcrude,(ii)highspeeddiesel,(iii)motorspirit(petrol),(iv)naturalgas,and
(v)aviationturbinefuel.