Legislative Framework - GST Ready Reckoner - GST

Legislative Framework India has adopted a Dual GST model in view of the federal structure of the country. Consequently, Centre and States simultaneously levy GST on taxable supply of goods or services or both which, takes place within a State or Union Territory. Thus, tax is imposed concurrently by the Centre and States, i.e. Centre and States simultaneously tax goods and services. Definition of Goods and Services Tax The term of GST, Goods, Services, State is defined under Article 366 of Constitution of India 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. [ Article 366 (12A) ] Goods includes all materials, commodities and articles. [ Article 366 (12) ] Service means anything other than goods. [ Article 366 (26A) ] State with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature. [ Article 366 (26B) ]. It is important to point out that the word used is 'supply' and not 'sale', in the definition of Goods and Service Tax. Thus, stock transfers, branch transfers will also get covered under GST net. Also, GST will be payable on free supplies made to related persons. Power to make laws with respect to goods and services tax [ Article 246A ] Article 246A in Constitution of India has been inserted w.e.f. 16-9-2016 to give concurrent powers to Parliament and legislature of each State to make laws with respect to goods and services tax imposed by the Union or by such State. Extent of laws made by Parliament and by the Legislatures of States Notwithstanding anything contained in articles 246 and 254 , Parliament, and Article 246A(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. 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. As per Explanation, the provision of this article also apply on Article 279A(5) The GST Council shall recommend the date on which the GST to be levied on - [Article 279A(5)] Petroleum crude High speed diesel, Motor spirit (commonly known as petrol), Natural gas and Aviation turbine fuel. Levy and collection of GST on Inter State Supply [ Article 269A ] Goods and services tax on supplies in the course of inter-State trade or commerce, import into the territory of India shall be deemed to be supply of goods, or of services, or both 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. [ Article 269A(1) ] Collection of GST is not part of Consolidated Fund of India - Article 269A The amount apportioned to a State under article 269A(1) shall not form part of the Consolidated Fund of India . [Article 269A(2)] Where an amount collected as tax levied on supply of goods or services in course of inter-state trade or commerce, import into the territory of India and has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India. In other words , Where an amount collected as IGST has been used for payment of SGST, such amount shall not form part of the consolidated fund of India/state respectively, only cash collection would be part of the consolidated fund of India. [Article 269A(3)] Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State. In other words, Where an amount collected as SGST has been used for payment of IGST, such amount shall not form part of the consolidated fund of India/state respectively, only cash collection would be part of the consolidated fund of India. [Article 269A(4)] Parliament is empower to 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 269A(5)] Constitution of Goods and Services Tax Council [ Article 279A ] The President shall, within sixty days from the date of commencement of the Constitution (101 th Amendment) Act, 2016, by order, Constitute a Council to be called the Goods and Services Tax Council. [Article 279A(1)] The provision relating to GST council came into force 12th September 2016 and President of India constitute GST council on 15th September 2016 Constitution of Member of GST council Constitution of the following members , namely: The Union Finance Minister is the Chairperson of GST Council; The Union Minister of State in charge of Revenue or Finance are the Members of GST Council; The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government are the Members of GST Council. [ Article 279A(2)] The GST Council shall make recommendations to the Union and the States on- [ Article 279A(4)] 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; The goods and services that may be subjected to, or exempted from the goods and services tax; Model GST Laws, principles of levy, apportionment of GST levied on supplies in the inter course of inter- state or commerce, import into territory of India. The principles that govern the place of supply; The threshold limit of turnover below which goods and services may be exempted from goods and services tax; The rates including floor rates with bands of goods and services tax; Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; 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 any other matter relating to the goods and services tax, as the Council may decide. The GST Council shall recommend the date on which the GST to be levied on - [Article 279A(5)] Petroleum crude High speed diesel, Motor spirit (commonly known as petrol), Natural gas and Aviation turbine fuel. One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. The Goods and Services Tax Council shall determine the procedure in the performance of its functions. Every decision of the Goods and Services Tax Council 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. Restrictions as to imposition of tax on the sale or purchase of goods [ Article 286 ] No law of a State shall impose, or authorise the imposition of, a tax on the supply of goods or of services or both, where such supply takes place - (a) outside the State; or (b) in the course of the import of the goods or services or both into, or export of the goods or services or both out of, the territory of India. [ clause (1) ] Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1). [ Clause (2) ]