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Definition of GST
• ARTICLE 366(12A)

“Goods and services tax”

means any tax on supply of
goods, or services or both .

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 Announcement of GST for the first time was made by the then
Union Finance Minister, during budget of 2006-07 that it would
introduced from 1 April 2010.
 Constitution (115th Amendment) Bill introduced and
subsequently lapsed (2011).
 The Constitution (122nd Amendment) Bill was introduced in the
Lok Sabha(2014).
 Bill passed by Rajya Sabha on 03.08.2016 & Lok Sabha on
08.08.2016.
 Notified as Constitution (101st Amendment ) Act, 2016 on
08.09.2016
 1st GST Council Meeting (SEP 2016).
 GST Council recommends all the rules (MAY 2017).
 All States except J&K passed their SGST ACT (30TH JUNE 2017)
 GST launched 1st July 2017.

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 GST Law from a Constitutional Perspective

s.no. Definition article definition

1. Goods 366(12) Includes all materials, commodities, and

articles [Pre Existing Definition]
2. Service 366(26A) Anything other than goods [Introduced vide
101st Constitutional Amendment Act] 3
3. With reference to articles 246A, 268, 269,269A
State 366(26B) and Article 279A includes a Union territory with
Legislature. [Introduced vide 101st
Constitutional Amendment Act]

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 Tax Structure

Direct Tax Indirect Tax

Income Tax Wealth Tax Central Tax State Tax

Entry Tax, luxury

Excise Service Tax Custome VAT tax, Lottery Tax,
etc.

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 Tax Structure

Indirect Tax =
Direct Tax GST (Except
customs)

Income Tax Wealth Tax Intra- state Inter State

CGST (Central) SGST (State) IGST (Central)

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 •Central Excise

CGST
•Additional duties of Custom (CVD)
•Service Tax
•Surcharges and all cesses

•VAT/sales tax
•Entertainment Tax
•Luxury Tax
•Lottery Tax
•Entry Tax
SGST •Purchase Tax
•Stamp Duty
•Goods and passenger Tax
•Tax on vehicle
•Electricity, banking, Real state

• CST
IGST
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 1.
Manufacturer

5.Government
2. Wholesaler
and Banks
Goods
+
Services

4.Consumer 3.Retailer

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 It will cover all types of person carrying on business
activities, i.e. manufacturer, job-worker, trader,
importer, exporter, all types of service providers, etc.
 If a company is having four branches in four different
states, all the four branches will be considered as TP
(Taxable person) under each jurisdiction of SGs.
 A dealer must get registered under CGST as it will make
him entitle to claim ITC of CGST thereby attracting
buyers under B2B (Business to Business) transactions.
 Importers have to register under both CGST and SGST
as well.

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 Chairperson – Union FM.
 Vice Chairperson - to be chosen amongst the Ministers of
State Government.
 Members - MOS (Finance) and all Ministers of Finance /
Taxation of each State.
 Quorum is 50% of total members.
 States - 2/3 weightage and Centre - 1/3 weightage.
 Decision by 75% majority.
 Council to make recommendations on everything related to
GST including laws, rules and rates etc.

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 Each taxpayer would be allotted a PAN linked taxpayer
identification number which is called GSTIN with a total of
13/15 digits.

 This would bring the GST PAN-linked system in line with the
prevailing PAN-based system for Income tax facilitating data
exchange and taxpayer compliance.

 The exact design would be worked out in consultation with

the Income-Tax Department.

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Existing Practice GST

Taxable event is “Supply “ of Goods &

Excise Duty-Manufacturing, service
The location of the supplier and the
recipient within the country is immaterial
Sales Tax/VAT- Sale of Goods for the purpose of CGST.

SGST would be chargeable only when the

Service Tax- Realization of Service supplier and the recipient are both
located within the State.

Inter state Supply of goods and services

will attract IGST.

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 Reduction in
Multiplicity of
Taxes
Self- Benefits to
Regulating Tax Small
System Taxpayers

Common Decrease in
National “Black”
Market Transactions

Reduction in
Overall
Cascading of
Reduction in
Taxes
Prices
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 Major flaw of this model is ,Local Dealers have to pay CGST in
addition to SGST.
 In Addition to this, CGST mainly represents the Excise/service
tax and SGST mainly represents the VAT portion but, because
of ‘No differentiation between Goods and Services’ service
supply within the state would attract SGST as GST is levied at
each stage in the supply chain and Assessee have to Pay CGST
as well SGST.
 The issue which still needs to be resolved are, the revenue
sharing between States and Centre, and a framework for
exemption, thresholds and composition.

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