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RESPONDENT

Whether the current fiscal regime under the constitution of westeros permit double
taxation by the various GST legislations and thus violative of Art. 19(1)(g).

Financial relations

Currently, fiscal powers between the centre and the states are clearly demarcated in the
constitution of india with almost no overlap between the respectice domains. The centre has the
powers to levy tax on the manufacture of goods(except for alcohol, liquor for human
consumption, opium, narcotics etc.) while the states have the powers to levy tax on sale of
goods.in case of – state sales, the centre has a power to levy a tax(the central sales tax) but, the
tax is collected and retained entirely by the originating states. As for service sales, it is the centre
alone that is empowered to levy service tax. Since the states are not empowered to levy any tax
on the sale or purchase of goods in course of their importation into or exportation from india, the
centre levies and collects this tax as additional duties of customs, which is in addition to the basic
customs duty.

Also, the implementation of GST is one of the biggest indirect tax reforms in the country and is
expected to bring together state economies and improve overall economic growth of the nation.
GST is a “comprehensive indirect tax” levy on manufacture, sale and consumption of goods as
well as services at the national level. It will replace “all indirect taxes levied on goods and
services by states and Central”.

The success of GST as humbly submitted to the Hon’ble Court can be widely seen by the vary
fact that there are around 160 countries in the world that have GST in place. GST is a destination
based taxed where the tax is collected by the State where goods are consumed.

Introduction of GST is considered to be a significant step in the reform of indirect taxation in the
Republic of Westeros. Amalgamating of various Central and State taxes into a single tax as
under the name of GSt would help mitigate the difficulties of double taxation, cascading,
multiplicity of taxes, classification issues, taxable event, and etc., and leading to a common
national market. Therefore, the allegations put up by the plaintiffs that the state GST act
introduced by The North has included income tax in the garb of GST is completely vague and is
not to be taken into consideration at any point so as to challenge the scope of the state GST Act.
Also, it is clearly mentioned that new tax regime in the country has been introduced so as to
introduce transparent and corruption-free tax administration, removing the current shortcomings
in the indirect tax structure and has no role to play with respect to the direct tax i.e. income tax as
it has its separate tax regime for its collection and its imposition being a subject of both central as
well as state list.

GST as a composite indirect tax system is business friendly as well as consumer friendly and
hence has been introduced by the government so as to make the business in the individual states,

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in the central states and the inter-state business more convenient and free from any restrictions.
GST in India is poised to drastically improve the positions of each of these stakeholders.

As a result, indirect taxes are often charged twice or thrice on the same good or service. The
inflated bill is then glibly passed on to the consumer. By unifying taxes, GST sorts out these
tangles and allows smoother tax set-offs across the value chain. This is bound to reduce selling
prices for consumers.

Indian federal structure and constitutional powers of states allow both, the Union and States to
levy taxes on the subjects in terms of Constitution of India. While there are powers to levy taxes
by the Union alone and also States alone, there is also a concurrent list whereby both, states and
centre can levy tax simultaneously.

Schedule VII of the constitution divides this subject into three categories –

(a) Union list (only Central Government has power)

(b) State list (only State Government has power)

(c) Concurrent list (both Central and State Governments have power).

It is also an acceptable reality that sooner or later we (India) is going to have the biggest ever
indirect tax reform since Independence when all major indirect taxes get subsumed into a
common tax called ‘Goods and Services Tax’ (GST), which as per present proposition will be
levied by both the Governments, i.e. Central as well as States concurrently. It is proposed that
Central Government will levy a GST called Central Goods and Service Tax (CGST) and State
Governments will levy a GST called State Goods and Service Tax (SGST). Further, for inter-
state transfer of goods, there will be a GST called Integrated Goods and Service Tax (IGST).

GST is one of the biggest indirect tax reforms in the country. GST is expected to bring together
state economies and improve overall economic growth of the nation.

GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well
as services at the national level. It will replace all indirect taxes levied on goods and services by
states and Central.
There are around 160 countries in the world that have GST in place. GST is a destination based
taxed where the tax is collected by the State where goods are consumed. India is going to
implement the GST from July 1, 2017 and it has adopted the Dual GST model in which both
States and Central levies tax on Goods or Services or both.
Introduction of GST is considered to be a significant step in the reform of indirect taxation in
India. Amalgamating of various Central and State taxes into a single tax would help mitigate the
double taxation, cascading, multiplicity of taxes, classification issues, taxable event, and etc., and
leading to a common national market.

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GST is one of the biggest indirect tax reforms in the country. GST is expected to bring together
state economies and improve overall economic growth of the nation.

GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well
as services at the national level. It will replace all indirect taxes levied on goods and services by
states and Central.
There are around 160 countries in the world that have GST in place. GST is a destination based
taxed where the tax is collected by the State where goods are consumed. India is going to
implement the GST from July 1, 2017 and it has adopted the Dual GST model in which both
States and Central levies tax on Goods or Services or both.
Introduction of GST is considered to be a significant step in the reform of indirect taxation in
India. Amalgamating of various Central and State taxes into a single tax would help mitigate the
double taxation, cascading, multiplicity of taxes, classification issues, taxable event, and etc., and
leading to a common national market.
GST is business friendly as well as consumer friendly.GST in India is poised to drastically
improve the positions of each of these stakeholders. We need a change in the taxation system
which is better than earlier taxation. This need for change leads us to ‘need for GST’.
India is already supposed to be on a value-added tax regime. But under the current fragmented
system, with the Centre and States levying separate taxes, the value-added concept exists only on
paper. State VAT and the central taxes cannot be set off against each other. Within Cenvat,
manufacturers cannot claim set-offs for central sales tax, additional excise duty or additional
customs duty on inputs used. Likewise, state VAT does not allow input credit for central sales
tax, octroi or mandi tax. Tax credits on capital goods are denied both to manufacturers and
service providers.

As a result, indirect taxes are often charged twice or thrice on the same good or service. The
inflated bill is then glibly passed on to the consumer. By unifying taxes, GST sorts out these
tangles and allows smoother tax set-offs across the value chain. This is bound to reduce selling
prices for consumers.

Indian federal structure and constitutional powers of states allow both, the Union and States to
levy taxes on the subjects in terms of Constitution of India. While there are powers to levy taxes
by the Union alone and also States alone, there is also a concurrent list whereby both, states and
centre can levy tax simultaneously.

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It is also an acceptable reality that sooner or later we (India) is going to have the biggest ever
indirect tax reform since Independence when all major indirect taxes get subsumed into a
common tax called ‘Goods and Services Tax’ (GST), which as per present proposition will be
levied by both the Governments, i.e. Central as well as States concurrently. It is proposed that
Central Government will levy a GST called Central Goods and Service Tax (CGST) and State
Governments will levy a GST called State Goods and Service Tax (SGST). Further, for inter-
state transfer of goods, there will be a GST called Integrated Goods and Service Tax (IGST).
Thus, though the major indirect taxes get subsumed, still we will have to live with three formats
of GST.

In the interest of country, Union Government/ Empowered Committee of State Finance Ministers
should ensure that no State levies any new tax concurrently with the GST and this should be
ensured by way of statutory provisions in the State GST legislation. We as citizens of the country
need this much of assurance. It this is not done, besides inflation, we will end up with something
like tax extortion and tax terrorism wherein citizens are taken for granted in the garb of
Constitutional powers and federal system.

Also, time is not far when we may have all sorts of ridiculous taxes which are unhealthy and
regressive for the country. After all, taxes also should not lead to a situation of obesity of taxes.

3) McDowell & Co. Ltd. v. CTO [ 1985] 154 ITR 148 ( SC) / [TS-1-SC-1985]

Probably one of the most debated decisions when it was first delivered, ( I had barely started my
articleship then), this decision remains landmark in terms of explaining the difference between
tax avoidance and tax evasion. It also clearly frowned upon tax avoidance, a legal way of
avoiding tax and held that tax planning was legitimate provided it was within the framework of
the law. Colourable devices cannot be part of tax planning and it is wrong to encourage or
entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious
methods. It is the obligation of every citizen to pay taxes honestly without resorting to
subterfuges. This decision even though not completely giving a go by to looking at the legal
form of a transaction for the purpose of levy of tax, did draw the line when it came to approving
transactions which were entered into only for the purpose of avoidance of payment of tax.
Probably the world has come a long way since then with General Anti Avoidance Rules (
GAAR) now being a part of the tax legislation in several countries and the world debating on the
morality of multinationals like Google or Starbucks. This decision clearly was the guidance for
an important principle that stretching of the law beyond a point would be counterproductive.

4) Vania Silk Mills ( P) Ltd. v. CIT [ (1991) 191 ITR 647 ( SC) ]/ [TS-3-SC-1991]

This decision dealt with another important principle of interpretation of tax law, namely that a
term or an expression, should not be interpreted in isolation but has to take colour from
associated words and expressions and that its meaning will have to be restricted to the sense
analogues to them. If the Legislature intended to extend the definition, then it ought to provide as
such. The expression being interpreted was ' extinguishment of right' and the Supreme Court held

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that the expression was used in the context of ' transfer' under the Income- tax Act, 1961 ( Act),
the expression could not be said to include extinguishment of right independent of or otherwise
than on account of transfer. In this context, it held that loss of asset by fire did not amount to a
transfer and that money received from the insurance company was not received on account of
extinguishment of rights in an asset.

(i) Taxes previously levied and collected by the Centre:

1. Central Excise duty


2. Additional Duties of Customs (commonly known as CVD)
3. Special Additional Duty of Customs (SAD)
4. Service Tax

AND
(ii) Taxes previously levied and collected by the State:

1. State VAT
2. Central Sales Tax
3. Entertainment and Amusement Tax (except when levied by the local bodies)
4. Taxes on lotteries, betting, and gambling
5. Luxury Tax
6. Octroi

Why are we getting 3 taxes -SGST, CGST, IGST?


India is a federal country where both the Centre and the States have been assigned the
powers to levy and collect taxes. Both the levels of Government have distinct
responsibilities to perform, as per the Constitution, for which they need to raise resources.
The Centre and States are simultaneously levying GST.
3 types tax structure is implemented to help taxpayers take the credit against each other
thus ensuring “One nation one tax”.
The tax shall be levied as Dual GST separately but concurrently by the Union (central tax -
CGST) and the States (including Union Territories with legislatures) (State tax - SGST) / Union
territories without legislatures (Union territory tax- UTGST). The Parliament would have
exclusive power to levy GST (integrated tax - IGST) on inter-State trade or commerce (including
imports) in goods or services. The Central Government will have the power to levy excise duty
in addition to the GST on tobacco and tobacco products.

CGST, SGST /UTGST& IGST would be levied at rates to be mutually agreed upon by the
Centre and the States under the aegis of the GSTC.1

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http://www.cbec.gov.in/resources//htdocs-cbec/gst/gst-concept-status-ason-
03062017.pdf;jsessionid=DDB14A3AD17C78A001CCF02A703D3155

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A Goods and Services Tax Council (GSTC) shall be constituted comprising the Union Finance
Minister, the Minister of State (Revenue) and the State Finance Ministers to recommend on the
GST rate, exemption and thresholds, taxes to be subsumed and other features. This mechanism
would ensure some degree of harmonization on different aspects of GST between the Centre and
the States as well as across States.

Make in India: (i) Will help to create a unified common national market for India, giving a boost
to Foreign investment and “Make in India” campaign;

(ii) Will prevent cascading of taxes as Input Tax Credit will be available across goods and
services at every stage of supply;

(iii) Harmonization of laws, procedures and rates of tax;

(iv) It will boost export and manufacturing activity, generate more employment and thus
increase GDP with gainful employment leading to substantive economic growth

(v) Ultimately it will help in poverty eradication by generating more employment and more
financial resources;

(vi) More efficient neutralization of taxes especially for exports thereby making our products
more competitive in the international market and give boost to Indian Exports;

(vii) Improve the overall investment climate in the country which will naturally benefit the
development in the states;

(viii) Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate
arbitrage between neighboring States and that between intra and inter-State sales;

(ix) Average tax burden on companies is likely to come down which is expected to reduce prices
and lower prices mean more consumption, which in turn means more production thereby helping
in the growth of the industries . This will create India as a “Manufacturing hub”.

(B) Ease of Doing Business:

(i) Simpler tax regime with fewer exemptions;

(ii) Reductions in the multiplicity of taxes that are at present governing our indirect tax system
leading to simplification and uniformity;

(iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes- so lesser
investment of resources and manpower in maintaining records;

(iv) Simplified and automated procedures for various processes such as registration, returns,
refunds, tax payments, etc;

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(v) All interaction to be through the common GSTN portal- so less public interface between the
taxpayer and the tax administration;

(vi) Will improve environment of compliance as all returns to be filed online, input credits to be
verified online, encouraging more paper trail of transactions;

(vii) Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax
return, common tax base, common system of classification of goods and services will lend
greater certainty to taxation system;

(viii) Timelines to be provided for important activities like obtaining registration, refunds, etc;

(ix) Electronic matching of input tax credits all-across India thus making the process more
transparent and accountable.

(C) Benefit to Consumers:

(i) Final price of goods is expected to be lower due to seamless flow of input tax credit between
the manufacturer, retailer and service supplier; (ii) It is expected that a relatively large segment
of small retailers will be either exempted from tax or will suffer very low tax rates under a
compounding scheme- purchases from such entities will cost less for the consumers; (iii)
Average tax burden on companies is likely to come down which is expected to reduce prices and
lower prices mean more consumption.

Sri Krishna Das vs Town Area Committee, Chirgaon on 20 March, 19902


We do not find any merit in the appellant's submission that there was double taxation in
this case. The expression "double taxation" is often used in different senses, namely, in its strict
legal sense of direct double taxation and in its popular sense of indirect double
taxation. Double taxa- tion in the strict legal sense means taxing the same proper- ty or subject
matter twice, for the same purpose, for the same period and in the same territory. To
constitute double taxation, the two or more taxes must have been (1) levied on the same
property or subject matter, (2) by the same Govern- ment or authority, (3) during the same taxing
period, and (4) for the same purpose. "There is no double taxation, strictly speaking" says
Cooley, "where (a) the taxes are imposed by different States, (b) one of the impositions is not a
tax, (c) one tax is against property and the other is not a property tax, or (d)
the double taxation is indirect rather than direct."
REASONABLE RESTRICTIONS IN THE INTEREST OF THE GENERAL PUBLIC

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1991 AIR 2096, 1990 SCR (2) 13

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Under this heading firstly, the restriction imposed must be required in “the interest of the general
public” and secondly, it must be a “reasonable restriction”.

The expression, “in the interest of general public,” the court has held, “is of wide importance
comprehending public order, public health, public security, morals, economic welfare of the
community and the objects mentioned in Part iv of the constitution.”

The supreme court said that the power of control is an incidence of the society’s right to self
protection and it rests upon the right of the state to care for the health,moral and welfare of the
people

It is also urged that the levy is unconstitutional and illegal since the levy is really a tax on the
profession, trade, calling or employment, relatable to Entry 60 of List II of 7th Schedule to the
Constitution of India. It is contended that valuation of taxable services inclusive of material costs
is illegal, unjust and without any basis, unscientific, irrational, and would lead to double taxation
since the materials would have already suffered a tax on account of sales tax.