GST India Forum – Goods and Services Tax | Place for Experts Forums Discussion Where is the power to levy GST derived from?

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  • Adarsh MadrechaAdarsh Madrecha
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    #651 |

    As per FAQ released by CBEC, answer to the question “Where is the power to levy GST derived from?” is as below

    Article 246A of the Constitution, which was introduced by the Constitution (101st Amendment) Act, 2016 confers concurrent powers to both parliament and state legislatures to make laws with respect to GST. However, clause 2 of Article 246A read with Article 269A provides exclusive power to the Parliament to legislate with respect to inter-state trade or commerce.

    But, can someone explain in more detail as to how this power lies with parliament as well as state legislatures?

    Adarsh MadrechaAdarsh Madrecha
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    Constitution is the foundation and source of powers to legislate all laws in India. Parliament, as well as State Legislatures, gets the power to legislate various laws from the Constitution only and therefore every law has to be within the vires of the Constitution.

    The Constitution provides for delineation of power to tax between the Centre and States. While the Centre is empowered to tax services and goods up to the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax on supply of services while the Centre does not have the power to levy tax on the sale of goods. Thus, the Constitution does not vest express power either in the Central or State Government to levy a tax on the ‘supply of goods and services’. Moreover, the Constitution also does not empower the States to impose tax on imports. Therefore, it is essential to have Constitutional Amendments for empowering the Centre to levy tax on a sale of goods and States for levy of service tax and tax on imports and other consequential issues.

    Article 246(1) of Constitution of India states that Parliament has exclusive powers to make laws with respect to any of matters enumerated in List I in Seventh Schedule to Constitution(i.e Union list). Article 246(3) provides that State Government has exclusive powers to make laws for State with respect to any matter enumerated in List II of Seventh Schedule to Constitution(i.e. State List). Parliament has exclusive powers to make laws in respect of matters given in Union List and State Government has the exclusive jurisdiction to legislate on the matters containing in State List.

    There is yet another list i.e List III (called concurrent list) in the Seventh Schedule to the Constitution. In respect of the matters contained in List III both the Central Government and State, Governments can exercise powers to legislate. In the case of Union Territories, Union Government can make laws in respect of all the entries in all the three lists. List III of Seventh Schedule(i.e Concurrent list) includes entries like Criminal law and Procedure, Trust and Trustees, Civil Procedures, economic and social planning, trade unions, charitable institutions, price control factories, etc.

    • The Union List or List-I is a list of 100 items (though last item is numbered 97) on which Parliament has exclusive power to legislate
    • The State List or List-II is a list of 61 items (Initially there were 66 items in the list)
    • The Concurrent List or List-III is a list of 52 items(though the last item is numbered 47)  concerned with relations between the Union and States

    In case there is a conflict between the laws legislated by State Government and Central Government in respect of entries contained in the Concurrent list, a law made by Union Government prevails.

    Ordinarily speaking if govt had to bring a law which is a subject matter of state list, then they would add that item to the concurrent list or in union list. But there is a catch in this. The items specified in the concurrent list have an overriding power by Central Govt over State Govt.[Article 246][Article 256]. That’s why to give equal powers, another article i.e. Article 246A is introduced.

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