CA Jayesh Gogri

CA Jayesh GogriFinally a step towards GST – major indirect tax reform in India, has been taken when 122nd Constitutional Amendment Bill,2014 made its way through the Lok Sabha on 17th December, 2014.

1.Highlights of the Constitutional Amendment

  • GST defined as “any tax on supply of goods or services or both except taxes on supply of alcoholic liquor for human consumption”
  • The term ‘Service’ defined for the first time in the Constitution as “Service means anything other than goods”
  • To empower the Centre and the States to impose taxes on supply of goods or services or both
  • Setting up of ‘Goods And Service Tax Council’ which shall provide recommendations on various matters relating to implementation of GST such as the rates of GST, exemption, threshold limit, taxes which may be subsumed, special provisions for backward States, date from which GST shall be levied on crude petroleum, diesel, petrol, natural gas and aviation turbine fuel etc.
  • Additional 1% GST on interstate supply of goods for a period of not exceeding 2 years or as may be prescribed by the Council, proceeds of which shall be assigned to the State wherefrom the goods originate
  • Supply of services in the course of import shall now be deemed to be as interstate transaction
  • Loss of revenue to the States due to implementation of GST would be compensated for a period not exceeding 5 years.

 2. Possible Impact

  • Words triggering levy of indirect taxes now viz. manufacture, sale, provision of service, entry etc. will lose its importance and the term “supply” will be of apex significance
  • CST to be replaced by the upcoming IGST on interstate supply as well as supply in the course of import of goods or services or both
  • Bill provides for setting up of Council having only a recommendatory role
  • The following taxes are proposed to get subsumed in the arena of GST:

gstOn analysing the above table, it transpires that Basic Customs Duty shall still prevail. Also, alcoholic liquor, crude petroleum, diesel, petrol, natural gas, aviation turbine fuel, tobacco and tobacco products are kept out of the GST preview for a limited period.

The first white paper on GST was out in 2009. Thereafter, draft Constitutional Amendment Bill was introduced in 2011 which did not see the light of the day and has already lapsed. Now, after a gap of around 3 years, the latest Constitutional Amendment Bill, 2014 is presented in Lok Sabha. For various reasons, introduction of GST is delayed since years. Let us hope and wait that emergence of GST boosts Indian markets and provide new avenues for growth and prosperity.

(Author is Director of GSC Intime Services Pvt. Ltd. And can be reached at Email: [email protected]com , Tel: +91 22 2684 0208, Website: )

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  1. Ajay M Pujara says:


    A very good article -with ‘useful’ information & ‘simplest’ explanations.

    Ajay M Pujara
    Baroda, Gujarat

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