What Changes are made in the Constitution (One Hundred and First Amendment) Act, 2016?

1. Insertion of new article 246A

After article 246 of the Constitution, the following article shall be inserted, namely:—

“246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (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.

(2) 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.

Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council.’’.

Need of Insertion of Article 246A

As per article 246(1) Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule referred as “Union List”.

Entry No. 84, 92A, 97 of Union List deliver the Exclusive Power to impose tax on Manufacturing (with some Exceptions), Inter State Sale or Purchase of Goods and Service Tax respectively.

As per article 246(3) Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule referred as “State List”.

Entry No. 51 and 54 of State List deliver the Exclusive Power to impose tax on Manufacturing (Selected Items) and Intra State (within the state) Sale or Purchase of Goods respectively.

As per article 246(2) Parliament and the Legislature of any State have concurrent power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule referred as “Concurrent List”)

As per article 254(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.

Article 254(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State:

Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.

Therefore to nullify the effect of article 246(1), 246(3), and 254 and to give common power to both Parliament and Legislature of state for making laws with respect to goods and services tax imposed by the Union or by such State, a new article 246A had been introduced through the Constitution (101st Amendment) Act, 2016.

However in respect of GST be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, this article shall be effective from the date recommended by the GST Council.

2. Some other Amendments are also made through the said Amendment Act which are tabulated below: 

Article Old Constitution New Constitution
248(1)

 

Residuary powers of legislation.

Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. Subject to article 246A, Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.
Conclusion: This power would be now exclude powers in respect of taxation of Goods and Services.
249(1)

 

Power of Parliament to legislate with respect to a matter in the State List in the national interest

Notwithstanding anything in the foregoing provisions of this Chapter, if the Council of States has declared by resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in the national interest that Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution, it shall be lawful for Parliament to make laws for the whole or any part of the territory of India with respect to that matter while the resolution remains in force. Notwithstanding anything in the foregoing provisions of this Chapter, if the Council of States has declared by resolution supported by not less than two-thirds of the members present and voting that it is necessary or expedient in the national interest that Parliament should make laws with respect to goods and services tax provided under article 246A or any matter enumerated in the State List specified in the resolution, it shall be lawful for Parliament to make laws for the whole or any part of the territory of India with respect to that matter while the resolution remains in force.
Conclusion: This power would be now exclude powers in respect of taxation of Goods and Services.
250(1)

 

Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation.

Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to any of the matters enumerated in the State List. Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to goods and services tax provided under article 246A or any of the matters enumerated in the State List.
Conclusion: This power would be now exclude powers in respect of taxation of Goods and Services.
268(1)

 

Duties levied by the Union but collected and appropriated by the States.

Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected—

a.    in the case where such duties are leviable within any Union territory, by the Government of India, and

b.   in other cases, by the States within which such duties are respectively leviable.

Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected—

a.    in the case where such duties are leviable within any Union territory, by the Government of India, and

b.   in other cases, by the States within which such duties are respectively leviable.

Conclusion: It would now be subsumed under GST.
268A

 

Service tax levied by Union and collected and appropriated by the Union and the States.

1)  Taxes on services shall be levied by the Government of India and such tax shall be collected and appropriated by the Government of India and the States, in the manner provided in clause (2).

2)  The proceeds in any financial year of any such tax levied in accordance with the provisions of clause (1) shall be—

a. collected by the Government of India and the States;

b.appropriated by the Government of India and the States,

in accordance with such principles of collection and appropriation as may be formulated by Parliament by law.

Article 268A of the Constitution, as inserted by section 2 of the Constitution (Eighty-eighth Amendment) Act, 2003 shall be omitted.
Conclusion: By subsuming Service Tax under GST, this article is redundant therefore it is omitted.
269(1)

 

Taxes levied and collected by the Union but assigned to the States

Taxes on the sale or purchase of goods and taxes on the consignment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in clause (2). Taxes on the sale or purchase of goods and taxes on the consignment of goods except as provided in article 269A shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in clause (2).
Conclusion: Those matters relating to sale or purchase of goods which now would be separately dealt with new section 269A, had been excluded from here.
269A

Newly Inserted in the Constitution (101st Amendment) Act, 2016: 

Levy and collection of goods and services tax in course of inter-State trade or commerce.

1)  Goods and services tax on supplies in the course of inter-State trade or commerce 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.

Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.

2)  The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.

3)  Where an amount collected as tax levied under clause (1) 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.

4)  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.

5)  Parliament may, by law, 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.’’.

Conclusion: This article is inserted to facilitate levy of IGST under the proposed GST.
270(1)

 

Taxes levied and  distributed between the Union and the States

All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268, 268A and 269, respectively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2). All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268, 269 and 269A, respectively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2).

(1A)  The tax collected by the Union under clause (1) of article 246A shall also be distributed between the Union and the States in the manner provided in clause (2).

(1B)  The tax levied and collected by the Union under clause (2) of article 246A and article 269A, which has been used for payment of the tax levied by the Union under clause (1) of article 246A, and the amount apportioned to the Union under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2).

Conclusion: It is further provided that the share accruing to the Union Government would be distributed to the States in the manner specified in Article 270.
271

 

Surcharge on certain duties and taxes for purposes of the Union

Notwithstanding anything in articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those articles by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India. Notwithstanding anything in articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those articles except the goods and services tax under article 246A by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.
Conclusion: Government had withdrawn the power referred in section 271 on those articles covered in new GST regime.
286

 

Restrictions as to imposition of tax on the sale or purchase of goods

 

Highlighted words are substituted.

1)  No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place

a)   outside the State; or

b)  in the course of the import of the goods into, or export of the goods out of, the territory of India.

2)  Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1).

3)  Any law of a State shall, in so far as it imposes, or authorises the imposition of,-

a)   a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or

b)  a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366,

be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.

1)  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.

2)  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).

3)  clause (3) shall be omitted.

Conclusion: Clause 3 relating to tax on certain specified goods with some restrictions had been withdrawn.
366

Definitions  

Newly Inserted in the Constitution (101st Amendment) Act, 2016:

 

Following Definitions had been newly inserted:

(12A) “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

(26A) “Services” means anything other than goods

(26B) “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature

368(2)

 

Power of Parliament to amend the Constitution and procedure therefor

Highlighted Text is inserted in the Constitution (101st Amendment) Act, 2016:

 

An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill:

Provided that if such amendment seeks to make any change in—

a)   article 54, article 55, article 73, article 162 or article 241, or

b)  Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or

c)   any of the Lists in the Seventh Schedule, or

d)  the representation of States in Parliament, or

e)   the provisions of this article,

the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.

An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill:

Provided that if such amendment seeks to make any change in—

a)   article 54, article 55, article 73, article 162, article 241, or article 279A, or

b)  Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or

c)   any of the Lists in the Seventh Schedule, or

d)  the representation of States in Parliament, or

e)   the provisions of this article,

the amendment shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.

Conclusion: Article 279A (Goods and Services Tax Council) also included in the list of articles where approval of 50% of the State Legislatures required to amend the said article.
Sixth Schedule

(Provisions as to the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram)

In Paragraph 8 (i.e. Powers to assess and collect land revenue and to impose taxes), Sub-paragraph 3(i.e. The District Council for an autonomous district shall have the power to levy  and  collect  all or any of the following taxes within such district, that is to say), an entry “e” is newly inserted: “taxes on entertainment and amusements”
Conclusion: Power to levy taxes on entertainment and amusements has also been given to District Councils of these areas.
Seventh Schedule

 

List-I: Union List

Entry 84:

Duties of excise on tobacco and other goods manufactured or produced in India except—

a)   alcoholic liquors for human consumption;

b)  opium, Indian hemp and other narcotic drugs and narcotics,

but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.

Entry 92:

Taxes on the sale or purchase of newspapers  and on  advertisements published therein

Entry 92C:

Taxes on Services

New Entry 84:

Duties of excise on the following goods manufactured or produced in India, namely:—

a)   petroleum crude;

b)  high speed diesel;

c)   motor spirit (commonly known as petrol);

d)  natural gas;

e)   aviation turbine fuel; and

f)    tobacco and tobacco products.

entries 92 and 92C has been omitted

Conclusion: All presently excisable goods has been included in GST regime therefore eliminated from old entry 84 except some items mentioned in new entry 84.

Articles covered under old entries 92 and 92C has also been included in GST.

Seventh Schedule

 

List-II: State List

Entry 52:

Taxes on the entry of goods into a local area for consumption, use or sale therein

Entry 54:

Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.

Entry 55:

Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television.

Entry 62:

Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.

Entry 52 has been omitted.

Entry 54:

Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.

Entry 55 has been omitted.

Entry 62:

Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.

Conclusion: Some entries are modified/ Deleted to come in line of new GST regime.
Compensation to States for loss of revenue on account of introduction of goods and services tax. Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years.
Transitional provisions Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.
Power of President to remove difficulties 1)  If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiry of three years from the date of such assent.

2)  Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament.

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