The 101 Constitutional Amendment Bill 2016 which is very popularly known as 122nd Constitutional Amendment Bill as passed by Rajya Sabha on 3rd August 2016 after waiting for more then a year when it was sent to it for passage. Certainly this day has become a red letter day in the history of Indian Tax reform as with the passing of this bill, the process of much awaited biggest reform in the history of Indian Tax System has speeded up.
The bill could not get clearance in Rajya Sabha in the past because the opposition ,which has majority there , was demanding certain provisions to be incorporated in the 122nd Constitutional Amendment Bill.
Given below is the gist of the demands :
After several rounds of talks between government and opposition, finally consensus had reached. By making suitable provisions for the following in the 122nd Constitution Amendment bill ,The Government accepted to:
The opposition gave up the demand of cap of 18% GST rate as it was not a practical demand.
Amended Constitutional bill as passed by Upper House was also passed by Lower House on 8th of August 2016. After obtaining ratification in 17 states assemblies , the President gave his assent to the bill on 8th Sept 2016. Thereafter on 15th of September 2016 GST council was constituted [Notification no. S.O. 2957 (E) . The GST council had already held two meetings and will continue to meet frequently to decide about various aspects of GST to make it a reality from 1st April 2017.
One of major steps towards this journey will be passing of CGST and IGST Acts in the parliament and SGCT Acts in every state and UT. At the center , Opposition has demanded the government not to introduce CGST and IGST bills as money bills and want to have these as Finance Bills. Now the question arises as to whether the CGST and IGST bills will be introduced as money bills or Finance Bills.
This can be summed up from going through the contents relating to Money Bill as given in the Article 110 of the Constitution of India.
Money Bills are those bills which contains the provisions on the matter listed in article 110. These matters are reproduced as under :
(1) For the purposes of this Chapter, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely
(a) the imposition, abolition, remission, alteration or regulation of any tax;
(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
(c) the custody of the consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
(d) the appropriation of moneys out of the consolidated Fund of India;
(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
(g) any matter incidental to any of the matters specified in sub clause (a) to (f)
(2) A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licenses or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes
(3) If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final
(4) There shall be endorsed on every Money Bill when it is transmitted to the Council of States under Article 109, and when it is presented to the President for assent under Article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill
Since GST pertains to imposition of new tax, it clearly falls under article 110 (1) (a). However Article 110 (2) contains that the decision of the Speaker the house of People on the issue of whether a bill is a money bill or not shall be final.
What if these bills are treated as money bill. What will happen in Parliament when these will be introduced for passage ? In Lok Sabha , there will likely to be easy passage of the CGST and IGST bills .But what is expected to happen in Upper House where the opposition has majority. Can Rajya Sabha block the passage of these bills ?
The answer lies in the fact that if any bill, which contains any one or more of the matters listed in Article 110, is introduced by the Government , is treated as money bill . Since GST will be a new legislation for imposing tax on supply of Goods and Services all over the country , the two bills one for CGST and other for IGST are expected to be introduced as money bills.
If these bills are introduced as a money bills , the constitutional provision is that such bills cannot be blocked in Rajya Sabha . Rajya Sabha has limited powers on money bills. It can neither reject nor amend these. It can make its recommendations only and has to return such bills to Lok Sabha. Lok Sabha may or may not accept such recommendations and the returned bills are considered passed in both the houses of Parliament and after obtaining Presidential assent becomes an Act.